In a recent interview with analysts at research and brokerage firm Bernstein, Michael Saylor, founder and executive chairman of MicroStrategy, said the company’s endgame was to be the leading bitcoin bank.

MicroStrategy has aggressively acquired bitcoin since 2020, leveraging debt and equity to maximize returns and outperform many traditional investments. The firm’s latest purchase of 7,420 BTC +0.13% announced last month took its holdings to 252,220 BTC, currently valued at just over $15 billion, against a total cost of around $9.9 billion and $4 billion worth of debt. That’s the equivalent of 1.2% of bitcoin’s total 21 million supply — making MicroStrategy the largest corporate bitcoin holder in the world.

Michael Saylor's thesis argues that bitcoin is the top-performing asset of the 21st century. He sees it as a revolutionary form of digital capital, offering a powerful hedge against inflation and a superior tool for long-term value storage. Saylor believes bitcoin’s volatility attracts investors seeking high returns, and over time, it will become essential for institutional and retail portfolios.

Under Saylor’s leadership, the firm has certainly shown conviction in the thesis, so if it’s right and MicroStrategy becomes a large company with hundreds of billions of dollars in bitcoin — what’s the endgame?

Saylor sees MicroStrategy as a bitcoin bank in the core business of creating bitcoin capital market instruments across equity, convertibles, fixed income and preferred shares, Bernstein digital asset lead Gautam Chhugani told clients in a Friday note.

“This is the most valuable asset in the world. The endgame is to be the leading bitcoin bank, or merchant bank, or you could call it a bitcoin finance company,” Saylor said. “If we end up with $20bn of converts, $20bn of preferred stock, $10bn of debt and say $50bn billion of some kind of debt instrument and structures instrument, we'll have $100-$150bn of bitcoin.”

“The company trades at a 50% premium, with more volatility and ARR, we can build a company that has a 100% premium to $150bn worth of bitcoin and build a $300-400bn company with the biggest options market, the biggest equity market,” he continued. “And then we basically start to chew into the fixed income markets, and we just keep buying more bitcoin. Bitcoin is going to go to millions a coin, you know, and then we create a trillion dollar company.”

The firm's strategy is based on its long-term belief in bitcoin as the best deflationary money. Currently, bitcoin makes up 0.1% of global financial capital, and Michael Saylor predicts this will rise to 7%, implying a $13 million price per bitcoin by 2045, Chhugani explained.

If U.S. capital markets allow MicroStrategy to raise funds through debt, equity, and other instruments, it will happily scale and arbitrage between USD capital markets and bitcoin, which Saylor expects to grow by 29% annually in his base case scenario, the Bernstein analyst said.

Asked how scalable the firm’s debt strategy was, “I think it's infinitely scalable,” Saylor replied. “I don't have any problem seeing how we could raise $100bn more capital and then $200bn after that. It's a trillion dollar asset class going to $10tn and then going to $100tn. The risk is very simple — it’s bitcoin. You either believe bitcoin is something, or you believe it's nothing.”

Chhugani also noted Saylor’s view that bitcoin’s underlying average annual growth yield was attractive enough to continue making money on capital markets arbitrage and not lend out bitcoin like a traditional banking model.

“My view is that it’s much more intelligent to borrow a billion dollars from the fixed income market and lend it to bitcoin at a 50% ARR, with no counterparty risk, than to reverse that and find someone willing to pay me 12%-14%,” Saylor said. 

The MicroStrategy founder argued that lending to individuals, corporations and governments is more risky than “lending to bitcoin” — by which he means investing in bitcoin — adding that the firm doesn't currently plan to lend out its bitcoin holdings.

“Instead, we think it’s a better idea to borrow $10bn from people who would be eager to lend and give them a 100 basis point more yield, and then lend to bitcoin for 30% to 50% interest with no counterparty risk,” he explained. “Once you get past the volatility and learn to manage it, the bear-case scenario I foresee is bitcoin increasing by only 22% a year over the next decade. Who would pay you 22% interest?”

Chhugani said MicroStrategy believes it has bridged USD and bitcoin markets by offering investable instruments, giving investors exposure to bitcoin volatility through options and convertibles with downside protection. On the other hand, MicroStrategy benefits from low-cost debt and attractive conversion premiums, a model hard for smaller companies to replicate and larger firms to offer due to their diverse business focus.

Bitcoin miner MARA is currently the second-largest corporate bitcoin holder after MicroStrategy, with holdings of 26,842 BTC ($1.6 billion), according to Bitcoin Treasuries. Japanese investment firm Metaplanet, which has perhaps been mirroring MicroStrategy’s playbook most closely, holds just 748.5 BTC ($45.7 million) following its latest acquisition of 109 BTC ($6.6 million) on Friday.

“Every company in the crypto ecosystem, including all bitcoin miners and exchanges like Coinbase, and Block, should adopt bitcoin as a treasury reserve asset. They are destroying as much shareholder value with their balance sheets as they are creating with their P&L,” Saylor said. “We're gradually winning over companies, like Semler Scientific and Marathon, which have taken a new stance. I expect to see more bitcoin miners and exchanges follow suit over time.”

Gautam Chhugani maintains long positions in various cryptocurrencies. Bernstein and its affiliates may receive compensation for investment banking services from MicroStrategy.

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