Five ways to buy bitcoin at the expense of investors

Strategy (formerly MicroStrategy) co-founder Michael Saylor has set his sights on aggressively replenishing bitcoin reserves through exchange-traded instruments starting in 2020. His approach has been dubbed “financial alchemy”: issuing bonds, prefs and ATM shares allows BTC redemptions with minimal or even positive consequences for shareholders.

In the face of this success, the number of companies with BTC on their balance sheets has increased dramatically. In the past six months, there have been more than 130 – and they are actively seeking their own ways to finance cryptocurrency purchases. Here are five strategies used by such companies.

• 1. Accretive dilution by issuing securities

Strategy (MicroStrategy) set a precedent: by selling shares at a price above the value of BTC on the balance sheet, the company mathematically increased the amount of bitcoin per share. Saylor also issued shares at a profit, which does not dilute ordinary shareholders, but guarantees future income.

Semler Scientific, MetaPlanet, Trump Media & Technology Group and others use the same method.

• 2. Selling options

Some companies sell options backed by an existing cache or planned BTC purchases and spend the premiums received on bitcoin purchases. This limits the upside potential, but is effective in a sideways market. So MetaPlanet uses exactly this strategy, as do funds such as the Purpose Bitcoin Yield ETF.

• 3. Purchase BTC from operating cash flow

Tesla, MARA and Twenty One Capital (affiliated with Tether and Bitfinex) are increasing BTC reserves from current revenues. Even if there is natural dilution of capital (options, convertible debt, etc.), the increase in bitcoin reserves can outpace the decline in shareholder interest.

• 4. Use of the insurance model

Insurance companies can invest part of their premiums in BTC. MassMutual, for example, has purchased $100 million in bitcoins. Some gupkcrasskrassky participants see such a model as a way to invest capital over the long term without engaging in active sales of securities.

• 5. Sale with leaseback – selling assets with leasebacks

Companies can sell offices or equipment and then lease them back, freeing up capital to buy BTC today and spreading payment obligations over the next few years. It’s another way to “buy now, pay later.”