BenWerkman on Nostr: $MSTR 200K Bitcoin Accumulation in 2024? So let's assume $MSTR has already ...
$MSTR 200K Bitcoin Accumulation in 2024?
So let's assume $MSTR has already accumulated the additional 9,730 BTC to get to 100K #Bitcoin for the year pending an announcement.
It's possible they blow peoples minds and go for another 100K by the end of December. So let's think about the feasibility of this.
Let's just assume they need $10B in capital to get another 100K (it might be more, but I'm assuming a $100K per BTC average because it's the weekend and I like easy math).
They can do this through 2 primary sources, the ATM and convertible debt.
Let's strategize.
Let's just take it at face value that our working strategic assumption as the Treasury team is that Bitcoin will close out the year at $100K. Now our target as an organization is to have accumulated 200K Bitcoin by the end of 2024 (210K is a better number, but let's be simple here).
We have to make some estimates about what our leverage ratio looks like as we execute towards our goals to keep us aligned with our risk framework so let's work it out.
At a price of $100K per Bitcoin, this would give them an estimated fair market value on their balance sheet of $38,915,000,000 for their Bitcoin at the end of 2024 if they hit their accumulation target of 389,150 BTC (Current 279,420, plus 9,730 to get to 100K, plus another 100K).
If they maintain 25% leverage against that, this means they could support $9.73B in convertible debt outstanding.
So with these assumptions in mind, this means they could raise an additional $5.4B in convertible debt if we assume nothing at all will convert (highly unlikely imo), if notes have/have committed to converting then they can raise more through this channel but let's stay conservative.
So then we need to come up with another $4.6B. There are 21 trading days in December (limiting the scope for simplicity and feasibility assessment) so they will need to raise ~$219.05M per day to hit their target.
They'd likely want to limit their impact on the market, so they'd want to keep a low issuance target like 2% of daily volume or something of this nature. So this assumes they need ~$11.0B in daily trading volume to issue this much daily. They can scale up on high volume days where possible, but this gives us an idea of what a baseline needs to look like.
Now, adding in that there are 2 weeks left in November to work with means their ATM daily could be lower and they can get a running start on convertible debt if they want. But again, we're stress testing a shorter timeframe for execution.
When you lay it out like this, it doesn't seem impossible to execute.
Now to stay within an assumed ~$65M of free cash flow on the bond coupons, we'd really be looking to hold $8.125B at a blended rate of 0.80% by the end of the year so that's where a couple conversions would help us out.
Anyways, fun brain activity for the weekend. I love that there are so many potential bullish outcomes for this community to kick around. Obviously this is just my own thoughts on the topic, so don't take this as MSTR's execution plans. I have no idea what they'll do, but it's fun to see if it's even remotely possible to achieve massive outcomes like this.
Hope everyone is having a great weekend!
So let's assume $MSTR has already accumulated the additional 9,730 BTC to get to 100K #Bitcoin for the year pending an announcement.
It's possible they blow peoples minds and go for another 100K by the end of December. So let's think about the feasibility of this.
Let's just assume they need $10B in capital to get another 100K (it might be more, but I'm assuming a $100K per BTC average because it's the weekend and I like easy math).
They can do this through 2 primary sources, the ATM and convertible debt.
Let's strategize.
Let's just take it at face value that our working strategic assumption as the Treasury team is that Bitcoin will close out the year at $100K. Now our target as an organization is to have accumulated 200K Bitcoin by the end of 2024 (210K is a better number, but let's be simple here).
We have to make some estimates about what our leverage ratio looks like as we execute towards our goals to keep us aligned with our risk framework so let's work it out.
At a price of $100K per Bitcoin, this would give them an estimated fair market value on their balance sheet of $38,915,000,000 for their Bitcoin at the end of 2024 if they hit their accumulation target of 389,150 BTC (Current 279,420, plus 9,730 to get to 100K, plus another 100K).
If they maintain 25% leverage against that, this means they could support $9.73B in convertible debt outstanding.
So with these assumptions in mind, this means they could raise an additional $5.4B in convertible debt if we assume nothing at all will convert (highly unlikely imo), if notes have/have committed to converting then they can raise more through this channel but let's stay conservative.
So then we need to come up with another $4.6B. There are 21 trading days in December (limiting the scope for simplicity and feasibility assessment) so they will need to raise ~$219.05M per day to hit their target.
They'd likely want to limit their impact on the market, so they'd want to keep a low issuance target like 2% of daily volume or something of this nature. So this assumes they need ~$11.0B in daily trading volume to issue this much daily. They can scale up on high volume days where possible, but this gives us an idea of what a baseline needs to look like.
Now, adding in that there are 2 weeks left in November to work with means their ATM daily could be lower and they can get a running start on convertible debt if they want. But again, we're stress testing a shorter timeframe for execution.
When you lay it out like this, it doesn't seem impossible to execute.
Now to stay within an assumed ~$65M of free cash flow on the bond coupons, we'd really be looking to hold $8.125B at a blended rate of 0.80% by the end of the year so that's where a couple conversions would help us out.
Anyways, fun brain activity for the weekend. I love that there are so many potential bullish outcomes for this community to kick around. Obviously this is just my own thoughts on the topic, so don't take this as MSTR's execution plans. I have no idea what they'll do, but it's fun to see if it's even remotely possible to achieve massive outcomes like this.
Hope everyone is having a great weekend!