What is the VALUE proposition of MicroStrategy? MSTR | Bitcoin Education

Video Transcript:

hello there and welcome to the hash power Academy my name is Jacob scanland I’m the lead educator here at the Academy and this is a place that we delve into anything and everything about Bitcoin that you wish to learn want to learn and how to learn it so we delve into Bitcoin from a fundamentals first perspective delving into the different aspects of energy production compute and Bitcoin mining which transcends energy and exports it to the internet to produce blocks of Bitcoin a timestamp server issuing a full supply of 21 million database units we call Bitcoin data money and so the context of today’s video is the IUS called micr strategy shares and how they have an underlying Bitcoin per share Associated to them we’re going to look at the different pricing comparisons between the shares and the Bitcoin per share nav value and also that time derived understanding of what is the long-term value potential of Bitcoin and thus also micro strategy so let’s get stuck in the first thing’s first thing to understand is that they’re no longer called micro strategy it’s now strategy because there is nothing micro about their Bitcoin purchases they currently own something like 499,000 Bitcoin which is nuts when you think about it and the first thing to understand about about this is if they own half a million Bitcoin and the full Supply is 21 million and a lot of that bitcoin’s been lost as well well this company have a first class front row seat to the spaceship that is Bitcoin and all of this underlying compute and energy aspects of infrastructure and commodities and all these other different value propositions that Bitcoin will offer now and into the future well this one single company is going to hold a significant share of all of that value potential and this is to say that everything to do with the expansion of Bitcoin in the energy sector of being able to stabilize grids price the electricity in Bitcoin monetize the continual buildout of more Renewables non-renewables and off- grid as well the construction of more grid infrastructure the deployment of more Bitcoin mining Hardware that produces heat and that can be used in pools and schools and green houses and everything in between and monetizing the microchip production line to innovate and make microchips and transistors more dense and all of this compute power the world’s most secure Well Network infrastructure and communication system that ensures that these blocks are being added with a cost to produce and that is the the unique value proposition of the Bitcoin blockchain or time chain shall we say because as more computes is joining the network the blocks may get faster and get produced quicker than 10 minutes and so it raises that security level the difficulty adjustment as to how hard it is to produce Bitcoin and that creates a pricing system the amount of Bitcoin earned per day gets priced against the 17 gaw of power constantly chasing the next block in the chain but why is this all important in the context of micro strategy we’ll delve into that now so energy space and time yes it’s very cliche but it’s a good way to just conceptualize what micro strategy are doing and how they’re doing it and why people are buying into their shares and what the long-term value proposition is over time so there’s about $140 worth of bitcoin per strategy share and the share price is trading at say 280 so the nav is well half the share price and so the shares are pring trading at a 2X premium so if you held one Bitcoin and you sold it to buy mstr your share price would be the dollar equivalent of the bit the Share value would be the dollar equivalent of the Bitcoin but you would only have half a Bitcoin per your per your share amount so why would you do that why would you sell a Bitcoin to re to buy into shares that trade half the amount of Bitcoin per share in underlying value well this is because the of the time component that uh micro strategy and Michael sailor are taking on debt so they borrow a billion dollars buy a billion dollars worth of bitcoin and as that appreciates they can capture that difference and they’re continually cycling more shares capturing that premium Andy cycling it into buying more value and that ability to accumulate the Bitcoin per share is something we call a creative dilution that is to say that if you own x amount of shares your percentage of the company as they continually issue more shares gets less so you start owning a smaller percentage of the company but the shares that you hold have a greater quantity of Bitcoin per share a creative dilution it sounds paradoxical but everything in this Bitcoin space is very paradoxical and then this time component of the long-term value proposition of a fixed Supply data energy derived monetary unit with energy and compute expanding underneath it with heating systems As One Direction carbon accounting as another and all the these other different pieces that all of these other layers of the network the Technologies and the Commodities are continually inflating and expanding under 21 million units and if half a million of those units are are owned by the single company that value proposition of cycling all of this volatile premium into more value per share well that’s going to have an interesting value proposition into the future but there’s also another component we haven’t discussed that micro strategy want to go in the direction of Bitcoin banking now I personally believe that compute power is the most fundamental commodity to a banking discussion when it comes to bitcoin why because how is Bitcoin issued through compute power how is it settled through compute power so essentially compute power is bitcoin’s Mama cuz it produces and set all transactions of the blockchain by finding the blocks because you either pay to play you pay to store your transaction data in a block or you produce the blocks yourself issuance and settlement are that Banking and settlement layer when it comes to the context of Bitcoin banking so that’s my thought for takeaway as to how the longevity of their value proposition is not going to be in a dollar dered derived well dollar derived D world but more so in in an energy and compute side of things and this is another interesting concept that the way that micro strategy are capturing share premium and cycling it back into Bitcoin to dollar value which is actually a premium in of itself when you contextualize it to Bitcoin mining why because Bitcoin miners produce Bitcoin at a discount if their production costs of the electrical bill means that for every $1 of energy they spend they produce $2 of Bitcoin their production cost for Bitcoin is about 50% this is to say that if they spend $40,000 on electricity to produce an $80,000 Bitcoin well Bitcoin to dollar is their premium and the underlying conversion exchange rate from electricity into Bitcoin from the mining side of things that is an approach of producing Bitcoin and capturing in the Bitcoin to dollar price as a premium so it’s the same approach that strategy are doing with converting into Bitcoin premium well they’re both premiums is what I’m trying to say so that’s a different sort of topic we can delve into in another video but the time aspect of things the the the borrowing of money is piercing a hole in the debt money system and truly I believe that the debt money trust model is going going to be changed we’re going to swap it to truth a storage system of absolute truth the layer one blockchain and all the different other layers that are going to come they’re just expansively creating more space for transaction velocity but having net settlement down to that blockchain layer as we talked about before in the perspective of a Bitcoin banking system again another topic for another day so I hope you enjoyed this video uh my throat’s going but I’m going to keep churning out videos as I can because I want to push out value into this uh Digital World of YouTube and everything else and in between so like subscribe share send it to the group chat and I will see you in the next one goodbye