Bloomstran Critiques Saylor’s Bitcoin Strategy as 'Idiotic'

Summary:
MicroStrategy, led by CEO Michael Saylor, has been aggressively accumulating Bitcoin, but this approach has drawn sharp criticism from seasoned investor Christopher Bloomstran. Bloomstran argues that the company's recent strategy represents a misguided financial decision that undermines its value.

Key Takeaways

Christopher Bloomstran labels MicroStrategy’s approach to Bitcoin as “idiotic.”
The company previously sold shares at a premium to acquire Bitcoin, a strategy Bloomstran viewed as smart but morally questionable.
Currently, MicroStrategy’s market cap is only 82% of its Bitcoin holdings’ market value, which Bloomstran sees as a key concern.
Bloomstran’s criticism arises after MicroStrategy's announcement of a substantial Bitcoin purchase, raising its average acquisition price.

Bloomstran Critiques Saylor’s Bitcoin Strategy as 'Idiotic'

The Flawed Strategy Behind MicroStrategy’s Bitcoin Purchases

MicroStrategy, under the leadership of Michael Saylor, has been engaged in a continuous Bitcoin-buying spree. However, veteran value investor Christopher Bloomstran points out a significant issue with this strategy, describing it as “idiotic” in a recent post on X, the social media platform. Though Bloomstran previously viewed the company's earlier methods as “smart,” he now believes the current approach crosses a critical line.

He explains how MicroStrategy previously sold shares—when their equity market value was considerably higher than the Bitcoin it held—to fund its Bitcoin purchases, a maneuver he considered somewhat crafty despite its ethical implications. However, the situation has since deteriorated. Presently, MicroStrategy's market cap stands at approximately 82% of the market value of its Bitcoin.

This shift raises a crucial point for Bloomstran. He argues that issuing new shares to buy additional Bitcoin equates to selling a dollar’s worth of value for 82 cents, thereby diluting the value of existing shares. This mathematical reality underlines Bloomstran's contention that the current strategy is misguided and represents a desperate attempt rather than a calculated investment.

The critique comes in light of MicroStrategy's recent announcement regarding a significant Bitcoin acquisition. According to reports from U.Today, the company has recently purchased 1,229 BTC at an average cost of around $88,568 per coin, which has inflated its average purchase price to nearly $75,000. This latest move by MicroStrategy, according to Bloomstran, raises further concerns about the sustainability and rationale of their ongoing Bitcoin accumulation strategy.