Strategy's Michael Saylor ran to Bitcoin after COVID lockdowns and stimulus threatened $500M reserves

Michael Saylor moved MicroStrategy, now called Strategy, into Bitcoin in 2020 after the U.S. government shut down the economy and flooded it with cash.

In an interview with psychologist Dr. Jordan B. Peterson on Wednesday, he explained that the COVID lockdowns, combined with zero interest rates, made holding cash a financial risk. “We had $500 million. We couldn’t keep it in dollars. It wasn’t safe,” Saylor said. He called that year “a war on currency.”

Saylor blamed the lockdowns for killing small businesses and putting regular workers out of jobs, while Wall Street made record profits. He said the system was broken and the Federal Reserve’s aggressive money printing only made it worse.

By the summer of 2020, the stock market was booming, not because of real growth, but because of excess money pumped in. And none of that helped him earn interest on the company’s massive cash reserves, which just sat there doing nothing.

Bitcoin became Strategy’s new treasury plan

Saylor said he needed a safe place to store value that wouldn’t erode under government pressure. He rejected traditional options like real estate, stocks, or fine art, saying they were either overpriced or too hard to manage.

“You can’t put $500 million in a Monet,” he said. In 2018, he thought Bitcoin was garbage. By 2020, after months of research through YouTube videos, books, and podcasts—helped along by his friend Eric Weiss—he changed his mind.

Bitcoin became the answer. “It’s harder than gold, easier to move, and doesn’t depend on banks or governments,” he said. In August 2020, MicroStrategy bought 21,454 Bitcoins for $250 million.

He said this was the company’s first step in converting its treasury to crypto. As of now, Strategy owns 582,000 Bitcoins, which is worth roughly $63 billion. The holdings made Strategy the largest corporate Bitcoin owner, based on the public tracker that monitors the firm’s crypto activity.

Saylor said his decision was strictly about protecting value. He said the old financial system had failed him, and Bitcoin offered independence. That move has turned Strategy into a model for other companies trying to escape inflation.

Chanos attacks Strategy’s model, Saylor responds live on air

But not everyone is buying it. Short seller Jimmy Chanos has been going after Strategy’s business structure for weeks, calling it misleading.

Speaking to Bloomberg TV last week, Chanos said Strategy’s shares trade at too high a premium compared to the actual value of the Bitcoin it owns. “It’s a great opportunity to short the stock and just buy the Bitcoin directly,” he said. At one point, the premium between stock price and underlying value hit 200%. Chanos said that was the perfect setup for an arbitrage trade.

He also criticized how Saylor values the company. “This is like saying a $500,000 house is worth $1.5 million because it appreciated $50,000 and you multiplied that by 20,” Chanos said. “It’s nonsense.”

He also described Saylor as “a wonderful salesman” who convinced investors to overpay based on hype. In his view, Strategy should be judged purely on its Bitcoin holdings, not any story around it.

Saylor pushed back during his own Bloomberg interview on Wednesday morning. “We’re the biggest issuer of Bitcoin-backed credit instruments in the world,” he said. He said Chanos doesn’t understand that Strategy isn’t a passive trust.

“Trusts can’t issue preferred shares. They can’t issue permanent shares at a premium. We can.” Saylor said Strategy actively uses its Bitcoin, unlike closed-end trusts, which simply sit on assets.

Chanos responded that: “These are perpetual. They’re not redeemable. If he doesn’t pay dividends, they’re not cumulative. Who the hell would buy that?” Chanos said he entered his short position when the premium was around 2.2 to 2.3 times and said it should be closer to 1. As of now, it’s around 1.8. He said if it ever drops below 1, “I will have covered my shorts.”

Saylor said that if the premium ever falls enough, Strategy plans to buy back shares. But he repeated his main point: Strategy is not a holding company. It operates. It issues instruments. It builds with Bitcoin. “We are not a closed-end trust. Trusts can’t leverage Bitcoin, they can’t issue preferred shares, they can’t issue permanent shares at a premium. We can,” he said.

That’s his defense, and for now, he’s not backing off. Perhaps Chanos should’ve thought of that before opening those short positions.

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