Michael Saylor on Citron's short bet on MicroStrategy (youtube.com)
Microstrategy, the company, is a Bitcoin treasury company. It's powered by a Bitcoin reactor. It has $35b in Bitcoin and it's spinning at 100vol. They make money by selling the vol and recycling it back into Bitcoin. And it's also stripping the risk and vol and performance off of fixed income securities and transferring that to the common stock. Their common stock is delivering 2x Bitcoin, 2x vol. They generate a BTC spread which is a function of the equity premium, the convert premium and the Bitcoin premium (the Bitcoin premium is the AR of Bitcoin versus the USD.
The thesis of the shorts of MSTR is that if the premium and in equity disappears Microstrategy can't make money. ‘What they miss is that when Microstrategy borrows money at 6% and invests it in Bitcoin and Bitcoin goes up 30%, it would be 80% BTC spread.’
Effectively a levered (2x) Bitcoin position? Bitcoin can go to 0.
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