Michael Saylor's bitcoin treasury model

Model Saylor's bitcoin-as-corporate-treasury thesis: allocate a company's cash and treasury reserves between bitcoin and cash, then compound both sleeves at your own return scenarios.

Michael Saylor Historical strategy from 2020 Rule located in MicroStrategy Incorporated (Form 8-K, Exhibit 99.1, via SEC EDGAR), 2020

Interactive model

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The source establishes the rule. The values below belong to you, and the output is JMM's deterministic calculation.

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Company cash and treasury

Bitcoin allocation

Bitcoin return scenario

Cash yield scenario

Horizon

years

Modeled treasury value in 5 years$81,438,478

Bitcoin sleeve: $50,283,930
Cash sleeve: $31,154,548
Gain over all-cash: $19,129,381
Bitcoin share of ending value: 61.7%

All-cash path

$62,309,097

Allocated path

$81,438,478

The treasury compounds at the return scenarios you enter. Volatility and drawdown risk are separate inputs this model does not invent.

Inspect the calculationThe same result in a readable record view

Bitcoin sleeve

Allocation: 50.0%
Entered return: 15.0%
Ending value: $50,283,930

Cash sleeve

Allocation: 50.0%
Entered return: 4.5%
Ending value: $31,154,548

Source and translation

What the source says, and what the calculator adds

Source-supported ruleThe company Saylor ran committed the policy to a filing: bitcoin is the primary treasury reserve asset on an ongoing basis, and Saylor’s own quoted words in the announcement call bitcoin "a legitimate investment asset that can be superior to cash" and the principal holding in the treasury reserve strategy.

JMM calculationJMM turns the allocation decision into a two-sleeve compounding model: an entered treasury splits between bitcoin and cash at the allocation you choose, and both sleeves compound at the return scenarios you enter.

Formula and methodTreasury value after the horizon = bitcoin sleeve × (1 + bitcoin return)^years plus cash sleeve × (1 + cash return)^years.

MicroStrategy Incorporated (Form 8-K, Exhibit 99.1, via SEC EDGAR) Aug 11, 2020MicroStrategy Adopts Bitcoin as Primary Treasury Reserve AssetSecond paragraph, quoting Michael J. Saylor, CEO: "MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy."

MicroStrategy Incorporated (Form 8-K, via SEC EDGAR) Sep 14, 2020MicroStrategy Incorporated Form 8-K, Treasury Reserve PolicyItem 8.01 Other Events: the Board adopted a Treasury Reserve Policy on September 11, 2020 under which reserve assets are cash assets above working capital plus bitcoin, "with bitcoin serving as the primary treasury reserve asset on an ongoing basis".

Decision notes

What changes the answer

The thesis is a bet on return, not a hedge

Allocating the treasury to bitcoin only helps shareholders if the entered bitcoin return beats the cash yield net of volatility costs. The model shows that comparison in dollars.

Dilution is the hidden counterparty

Saylor funds purchases partly with equity and convertible issuance; the model holds shares constant and therefore shows only half the picture.

A treasury is where a company keeps the money it cannot afford to lose. This puts it in the most volatile major asset there is.

Corporate treasury exists to make payroll and cover a bad quarter. Judged against that job, an allocation to an asset that has repeatedly fallen 70% is not a conservative reserve policy, whatever the long-run return turns out to be. Saylor’s defence is that cash is a guaranteed loss to inflation and bitcoin is not, and the first half of that is true. The model above prices the second half at whatever return you enter, which is the honest way to hold the argument: it is a directional bet on one asset, funded partly by issuing shares, and it should be argued as a bet rather than as prudence. JMM’s position is that the strategy has been vindicated by price and never by reasoning, and that the two are easy to confuse while the price is up.

Written by the JMM editor. This is a view, not a recommendation for your circumstances. Who writes this

Not the calculator’s limits. The rule’s.

The model holds shares constant and the real strategy does not
Purchases have been funded substantially by issuing equity and convertible debt. Per-share outcomes depend on the price at which those shares were sold, which is a second bet stacked on the first and sits entirely outside this calculator.
Volatility is a cost even when the return is positive
A reserve asset that can halve is unavailable at the moment you most need reserves. An annualised return says nothing about whether the company could have drawn on the treasury during the drawdown.

Limits

What this model does not know

The model is an allocation calculator, not a forecast for bitcoin or MicroStrategy.
Volatility, drawdowns, margin calls, and convertible-debt dilution are not modeled.
The treasury is treated as static: no purchases, sales, or funding events over the horizon.

Questions people ask

Before you use the result

Does Saylor recommend this for every company?

The cited filings commit MicroStrategy to the policy and quote Saylor arguing bitcoin is superior to cash. They do not extend the recommendation to other companies, and neither does this page.

Is 15% a Saylor forecast?

No. It is an editable first-load scenario. The calculator compounds whatever return you enter.

Take the answer further

The next question this page cannot answer

Keep researching Michael Saylor

Person fileMichael Saylor

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