Bitcoin is still early

[Brains428]

jacoavlu - you seem unconcerned about counterparty risk of BlockFi? It's probably the only reason why I haven't gone that direction. If s&*(% really hit the fan, would the money be there.

[Jantoven]

it's not impossible to directly hold bitcoin in an IRA or solo 401k

Really? How does one do that, sides from purchasing GBTC?

[jacoavlu]

jacoavlu - you seem unconcerned about counterparty risk of BlockFi? It's probably the only reason why I haven't gone that direction. If s&*(% really hit the fan, would the money be there.

certainly not unconcerned. But I also worry about what my spouse does if I get run over by a truck tomorrow.

[jacoavlu]

Really? How does one do that, sides from purchasing GBTC?

self directed IRA / 401k. Establish accounts in the name of the IRA / 401k trust. It's not that hard

[jacoavlu]

what a lot of people here talking about Tesla and Microstrategy and their bitcoin investment are missing is, look at the alternatives. What do they do with their cash? Continue to hold it and pretend that there is no inflation? Pay dividends out to shareholders? Repurchase their shares? Research and development? Pay down their debt? Invest in bonds, or other companies via the stock market? Purchase real estate or gold or something else?

[CordMcNally]

certainly not unconcerned. But I also worry about what my spouse does if I get run over by a truck tomorrow.

What if she’s driving the truck?

[Brains428]

I think some people want to see TSLA reinvest some of that money into R&D to actually get FSD to happen.

But I do understand the point on your truck comment. The FDIC insurance makes bank "trustable." But if there was really a run on banks in some sort of crisis, they also have the control to change the rules. So... yea.

[East coast]

what a lot of people here talking about Tesla and Microstrategy and their bitcoin investment are missing is, look at the alternatives. What do they do with their cash? Continue to hold it and pretend that there is no inflation? Pay dividends out to shareholders? Repurchase their shares? Research and development? Pay down their debt? Invest in bonds, or other companies via the stock market? Purchase real estate or gold or something else?

I brought this up a few pages ago. It's a huge issue from a shareholders perspective that they are not returning the $$ to shareholders. At some point activist investors presumably get involved and require shake up - could be 5 yrs from now, who knows.

[formerly_cn]

what a lot of people here talking about Tesla and Microstrategy and their bitcoin investment are missing is, look at the alternatives. What do they do with their cash? Continue to hold it and pretend that there is no inflation? Pay dividends out to shareholders? Repurchase their shares? Research and development? Pay down their debt? Invest in bonds, or other companies via the stock market? Purchase real estate or gold or something else?

This is fine and you can make argument that cash sitting is a losing asset. Problem is the way microstrategy is betting on bitcoin. This clearly means they are not at all a growth company otherwise they'd reinvest in that, or pay more dividends so shareholders get something. Taking loan out and then buying BTC...on a company that is struggling. Doesn't make sense to me. I am no CEO of big brand, but do own multiple SMEs.

[jacoavlu]

I brought this up a few pages ago. It's a huge issue from a shareholders perspective that they are not returning the $$ to shareholders. At some point activist investors presumably get involved and require shake up - could be 5 yrs from now, who knows.

shareholders are free to sell if they like. Or try to get on the board.

[jacoavlu]

This is fine and you can make argument that cash sitting is a losing asset. Problem is the way microstrategy is betting on bitcoin. This clearly means they are not at all a growth company otherwise they'd reinvest in that, or pay more dividends so shareholders get something. Taking loan out and then buying BTC...on a company that is struggling. Doesn't make sense to me. I am no CEO of big brand, but do own multiple SMEs.

I haven't researched but I don't think they've been a growth company for a long time. But I wouldn't call them struggling either. If you disagree, how so?

They had plenty of free cash flow and lots and lots of cash on hand. Capital allocation is part of what a CEO does. Saylor made his choice. Shareholders are free to hold, or sell. So far it's worked out pretty well for them.

[xraygoggles]

I’m interested I just don’t see how this isn’t a free lunch which is scary, talking about these Bitcoin “interest” schemes

You don't even need Bitcoin to get some juicy yields.

Protocols like Aave, Compound, and yearn.finance allow depositing fiat (via USD --> USDC, a stablecoin pegged to dollar). You can get anywhere from 8-18% APY on your money. Blows out savings accounts, high yield junks, REITs, etc.

No free lunch, however. The major risk is if the platform gets hacked or exploited (like what happened to yearn a week or two ago with 11M hack in the yDAI vault). However, they made all the depositors whole again. These are the types of early glitches and exploits which are inevitable in DeFi, but will be ironed out in due time.

Edit: Here's a great article for anyone asking "How can these platforms consistently give such high yield?" Short answer: it's in their marketing budget, but also they are able to lend them out at even higher rates. Interest rate arbitrage, just like any conventional brick and mortar bank (sans the brick and mortar).

https://www.theblockcrypto.com/post/...ollow-the-flow

[formerly_cn]

I haven't researched but I don't think they've been a growth company for a long time. But I wouldn't call them struggling either. If you disagree, how so?

They had plenty of free cash flow and lots and lots of cash on hand. Capital allocation is part of what a CEO does. Saylor made his choice. Shareholders are free to hold, or sell. So far it's worked out pretty well for them.

Their EBITDA was like 156M in 2015. In 2019 its 15M. They are making little cash flow.

Yea. I'd say they are struggling.

[NapoleanDynamite]

what a lot of people here talking about Tesla and Microstrategy and their bitcoin investment are missing is, look at the alternatives. What do they do with their cash? Continue to hold it and pretend that there is no inflation? Pay dividends out to shareholders? Repurchase their shares? Research and development? Pay down their debt? Invest in bonds, or other companies via the stock market? Purchase real estate or gold or something else?

I tried to stay away...But a message offline brought me back. Probably the dopamine hit I got from it. Anyways, I wanted to comment on Jacoavlu's comments. If you go back to my original post in May of 2020, Jaco was one of my biggest "critics"/questioner's when I started the initial thread. It makes me happy that he/she did some further reading. The questions you are asking are great questions. I don't have a crystal ball as to where/how this ends. But I still strongly believe that the risk/reward aspect to holding a percentage of your portfolio in BTC is a very good idea. I would again encourage any of you that are still close minded on the topic to open your minds and do some studying.

[jacoavlu]

Their EBITDA was like 156M in 2015. In 2019 its 15M. They are making little cash flow.

Yea. I'd say they are struggling.

ok