Strategy co-founder revealed a calculator with infinite bitcoin growth

Michael Saylor presented on the website of his company MicroStrategy a tool called BTC Credit Model, which supposedly allows investors to assess the sustainability of the company’s debt position under any fluctuations in the bitcoin exchange rate. However, the built-in limitations make BTC downside scenarios impossible in principle.

The calculator offers the user three parameters: the starting price of bitcoin, expected volatility, and annual returns. At the same time, even with the maximum allowed volatility (95%) and zero return, the model does not allow for negative dynamics to be pledged. As a result, any combination of parameters indicates that MicroStrategy will be able to cover all its debt obligations by 2032.

As a base case scenario, the calculator assumes 30% annual BTC growth and 50% volatility for seven years. Under these parameters, the current $8.2 billion in debt is fully covered by the 592,345 BTC on the company’s balance sheet – that’s more than $63 billion at current prices. Scenarios show that even the debt maturing in 2028 is covered 62 times, and total debt through 2032 is covered seven times.

The model does not take into account possible risks of asset liquidation, lawsuits or business changes. There is also no way to introduce negative returns, even though bitcoin has experienced multi-year bear cycles in the past.

In fact, the calculator programmatically prohibits the user from exploring scenarios with a fall in the price of BTC. Even when entering the most pessimistic acceptable values, the model states that assets are enough to cover debts, despite the fact that the risk of non-covering is estimated at 86.91%.

Although the current asset/liability ratio is in MicroStrategy’s favor, it seems that Saylor is intentionally avoiding any negative assumptions by publicly reinforcing confidence in the company’s financial strength. This may be an attempt to minimize investor concerns about a possible liquidity crisis.