Blockstream CEO Adam Back, who is alleged to be Bitcoin founder Satoshi Nakamoto, argued that the premium paid for MicroStrategy (MSTR) stock was not exaggerated.
Speaking with Bitcoin Podcast host Stephan Livera at the BTC Prague conference, Back noted that the firm has rapidly doubled the amount of Bitcoin per share, reducing risk for investors.
“In the case of MicroStrategy, we see that duration being 16 to 18 months. The stock has traded at twice its net asset value (NAV) at times. In that context, the premium seems reasonable,” Back said.
According to Back, the premium in the stock prices of companies holding Bitcoin treasury is not theoretical, but a natural result shaped by market conditions. He pointed out that companies' issuance of new shares at this premium and the purchase of Bitcoin increases the amount of BTC per share. “These companies buy more Bitcoin thanks to the premium, thus increasing the amount of Bitcoin falling to shareholders,” he said.
Describing MicroStrategy’s strategy as “an arbitrage between the fiat world and the future of Bitcoin,” Back stated that this method does not put investors at risk in the long run because the company compensates for this premium with Bitcoin.
However, Back noted that smaller companies trading at a higher premium pose a greater risk of volatility. Giving the example of MetaPlanet, Back said the company’s NAV multiple fluctuates between 5 and 10, which can stress investors.
However, he emphasized that such companies can be more agile in accumulating Bitcoin due to their smaller size. He added that being located in regulatory advantageous regions such as Japan can also facilitate this process.
Back, who also opposed Bitcoin's “diminishing returns” theory in his speech, drew attention to the anomalies experienced in previous cycles. Arguing that factors such as the COVID-19 pandemic, China's mining ban and money supply expansion overshadowed the 2020-2021 cycle, Back said that historical data could be misleading for this reason.
Stating that there could be an “S-curve”-like acceleration in Bitcoin adoption, Back suggested that this cycle could trigger widespread adoption, unlike in the past, and break previous patterns.
Back, who also spoke about Blockstream’s new initiatives in the last part of the conference, explained that with the company’s new application, users will be able to buy Bitcoin directly to their own wallets. He also stated that they are trying to make self-storage more accessible with Jade and Jade Plus hardware wallets.
“Self-custody is critical to the decentralization of the Bitcoin network. People holding their own keys is crucial to the security and control of the network,” Back said.
*This is not investment advice.
