4 years in, MicroStrategy’s Bitcoin gamble beats Warren Buffett’s warning

MicroStrategy purchased its first Bitcoin (BTC) stash on Aug. 10, 2020, becoming the first public-traded company to adopt the cryptocurrency as its primary treasury reserve asset. Four years later, the bold move has evolved into a defining strategy for the company that has outpaced even the returns of Warren Buffett's Berkshire Hathaway.

MicroStrategy nets $5.38B in Bitcoin profits

As of Aug. 10, 2024, MicroStrategy had 226,500 BTC worth $13.771 billion in reserves, which it acquired at an average cost of around $37,000. With Bitcoin currently trading at approximately $60,500, MicroStrategy is now sitting on unrealized profits of about $5.39 billion.

Despite the substantial gains, Michael Saylor's company has maintained its Bitcoin holdings, choosing not to liquidate any of its accumulated assets. It has expressed its intention to continue accumulating Bitcoin, further evidenced by its most recent purchase on Aug. 1.

Michael Saylor is beating legendary Warren Buffett

The value of MicroStrategy’s MSTR stock has responded bullishly to its Bitcoin purchases, having surged by around 1,000% since August 2020. In comparison, that is 1.5 times higher than BTC’s returns and 16.25 times higher than the returns of the S&P 500 (SPX) index in the same period. 

Interestingly, Warren Buffett’s Berkshire Hathaway Class A stock, BRK.A, has significantly underperformed compared to MSTR since MicroStrategy’s initial Bitcoin purchase. BRK.A has only gained 104.75% during this period, with Buffett's persistent negative stance toward Bitcoin keeping Berkshire from exploring crypto investments.

In 2018, Buffett called Bitcoin a “rat poison squared.” His close associate, the late Charlie Munger, went a step further and predicted that BTC's price would crash to zero, calling it a disgusting product, in his statement in 2021. 

Still, Bitcoin and MSTR have performed better than Buffett's top stock holdings, namely, Apple, American Express, and Bank of America, in recent years.

However, some traders have expressed their intentions to short the MSTR stock, with investment firm Kerrisdale Capital argying that it is trading at “unjustifiable premium” to Bitcoin.

“The software business is worth a billion, maybe a billion [point] five, somewhere in between — it’s not worth very much," Sahm Adrangi, chief investment officer at Kerrisdale Capital, told Cointelegraph, adding:

"Bitcoin prices have to go up for the value of the company to increase. If they go down the value of the company goes down. The company should be trading at the value of Bitcoin. Our argument is ‘go short MicroStrategy, go long Bitcoin.”