MicroStrategy announced this morning that its reserve of 649,870 Bitcoins is sufficient to cover 71 years of dividends at the current BTC price, “and any rise in the price of Bitcoin exceeding 1.41% per year will completely offset our annual dividend expenses.”
However, despite having such a strong “balance sheet”, the S&P 500 index refuses to include it, and now MSCI may also kick Strategy out of the main index. Once the dust settles, the crypto industry could lose billions of dollars in funding.
According to MicroStrategy data:
BTC holdings: 649,870 BTC
Valuation benchmark: $87,000/BTC
BTC total value: 56 billion dollars
Annual dividend coverage: 700 million dollars
Total debt: 8.2 billion USD
The dashboard shows that under the current Bitcoin price assumption, the dividends can indeed be maintained for 71 years.
A 1.41% annual BTC appreciation rate is the company's breakeven point, where the growth of BTC alone can cover dividends without tapping into the principal. However, it is important to note that no auditors or third-party analysts have verified the so-called 71-year claim. Besides the dashboard, no detailed assumptions have been published. MicroStrategy itself describes these as model predictions rather than guarantees.
However, Daniel Muvdi, the market director of Quantfury and founder of Bitfinanzas, strongly questions MicroStrategy's claim of “71 years of dividend coverage.” He believes there is a fundamental flaw in the logic of using Bitcoin to pay dividends.
Muvdi believes that any Bitcoin liquidation would immediately trigger a significant sell-off in MSTR's stock price, as the market closely monitors the Bitcoin held by the company and views it as a core value driver. He questions whether investors can tolerate the company “destroying Bitcoin” to pay dividends and points out that such a move would undermine market confidence and exacerbate downward pressure on the stock price. In his view, this statement is not only unrealistic but also misunderstands the market's valuation of MicroStrategy and its response to changes in its Bitcoin reserves. (CCN)
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