1Mon·

$MARA (-3.91%)
plays the Saylor playbook!

The $BTC (-0.51%) mining company Marathon Digital has just announced its intention to issue convertible bonds at 0% interest worth 700 million dollars to buy Bitcoin.

https://ir.mara.com/news-events/press-releases/detail/1380/mara-holdings-inc-announces-proposed-private-offering-of-700-million-of-zero-coupon-convertible-senior-notes

ir.mara.comMARA Holdings, Inc. Announces Proposed Private Offering of $700 Million of Zero-Coupon Convertible Senior Notes

20 Comments

Epi@Epi

1Mon

I have 700 million USD. Do I use it to buy BTC or do I give the money to a fuckwad who uses it to buy BTC at 0%?
Hmmm... 🤔
I think I'll take the fucker. No risk, no gain, as they say! 😅

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Stefan21@stefan_21

1Mon

@Epi This is a bit more complex :D For many institutions, buying Bitcoin directly is not possible/useful. However, Microstrategy or Marathon create an opportunity for the huge convertible bond market to gain Bitcoin exposure. The yield that can be achieved is unknown to the bond buyers😂
Have a look at the video by Florian. I found it very interesting :)
https://youtu.be/tA6Ru77xU6Q?si=spR1EhX6fG5Rseqg

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Daxdaniel@Daxdaniel

1Mon

The big difference is that if Bitcoin falls, you get your money back with the convertible bond - as long as the company remains solvent.
If Bitcoin rises, and with it the value of the company, you still take the upside potential with you. At least that's the idea from an investor's perspective

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Stefan21@stefan_21

1Mon

@Daxdaniel Exactly, you have the option of exchanging the bond for shares. If the share price continues to go through the roof, you can make incredible profits here. If things go wrong, the downside is limited - you get your investment back through the 0% bond.

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Epi@Epi

1Mon

@stefan_21 I once had shares in a smaller real estate developer ($AMMN). They also issued convertible bonds for investments during the boom. Looked like a great deal (7%pa and a guaranteed purchase price 50% above the current price). 2 years later they stumbled. The convertible bond was first converted into a normal one, then restructured at a significant discount. In the end, the bondholders lost around 50%.
I fear the same thing here...

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Stefan21@stefan_21

1Mon

@Epi that is definitely within the realm of possibility😅
I'm very curious to see how this will develop in the next bear market. Imagine Microstrategy being forced to sell Bitcoin. That could be a real fire accelerator

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Epi@Epi

1Mon

@stefan_21 That would be nothing new and - if you follow Soros - would even be necessary due to certain market laws.
This is likely to be the story of the coming bear market: the forced sell-off of BTC by all the companies will push the price to unimagined lows. 🤔

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Daxdaniel@Daxdaniel

1Mon

I also see this new model as one of the biggest risks for Bitcoin. Basically, it is nothing more than endless money printing if you can support the price yourself with free money and that in turn
prices rise and pave the way for more free money.
Either things will continue to go up so rapidly or they will be regulated and there will be a certain crash...
It all borders very strongly on market manipulation and I wonder how and when this will end.

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Epi@Epi

1Mon

@Daxdaniel There are always such "money printing cycles" in stock market history. They seem endless at first, but when the trend breaks, it quickly goes down steeply and deeply and the recovery takes a very long time. In most cases, they are downright dead assets for 10+ years. E.g. EM bonds in the early 90s, InternetVentureCapital in the late 90s. Then came commodity penny stocks, then leveraged real estate loans, etc. I've been through it many times.

On the other hand, most of the money is made in the final phase of the self-reflective boom. In my opinion, BTC is on the verge of this. The problem: hardly anyone benefits from it because most people see the boom as a reason to stay in the asset class forever. It went so well and BTD worked wonderfully. You get in and in between you never realize paper profits and in the end the capital is dead. 😅

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V7Hodl@V7Hodl

1Mon

@Epi I also think that the microstrategy story will go wrong at some point. But I don't think that Bitcoin will be harmed by this - apart from short-term price slumps. It won't change anything for Bitcoin itself. I rather think that it would not be harmful if it goes wrong. Then Bitcoin would be better distributed again. It's certainly not healthy that a single company has bought 2% of the entire supply - largely on credit. I'm also extremely skeptical about Saylor. But I am also convinced that this will not harm Bitcoin in the long term.

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Epi@Epi

1Mon

@V7Hodl I think BTC will also survive MSTR 😉
However, the death of the business model will lead to a significant drawdown for BTC. -80% would come as no surprise. After that, MSTR is bankrupt and BTC can rise again. 😅

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View all 5 further answers

GeldGenie@GeldGenie

1Mon

'bubble intensifies' :-P

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Stefan21@stefan_21

1Mon

@GeldGenie There is of course a risk that Microstrategy or Marathon will come under pressure in the next bear market.
If they are then forced to sell their Bitcoin, things could really go boom.
On the other hand, MSTR has already survived a complete bear market by continuing to buy haben🤷‍♂️ we'll see

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ThemenmitKopf@topicswithhead

1Mon

Do they buy from themselves or in addition?

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Stefan21@stefan_21

1Mon

@topicswithhead they want to acquire additional Bitcoin from it :)

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