Apparently, MicroStrategy ‘s Michael Saylor is considering lending the company’s Bitcoin. On a corporate level, that makes all the sense in the world. As a Bitcoiner, it doesn’t. Will MicroStrategy actually go through with it? Is lending a reasonable strategy? What are the implications? Also, why are hardcore Bitcoiners so against lending? Those questions and more, that’s what we’re here to explore.
In any case, the lending should surprise no one. Saylor has been dropping hints that he intends to do it for a while now. All of this information comes from the “company’s investor day call with shareholders” on Thursday, Bloomberg informs. So, they’re still thinking about it and there are a few options on the table. And, even if they choose to lend the Bitcoin for yield, there are infinite possibilities there. What does “a trustworthy counterparty” mean? Is it just a company that can guarantee yield, custody, and return of their BTC? Or are they talking about a company that’ll use that Bitcoin in an ethical way and not short their own investment?
That’s one of the main reasons hardcore Bitcoiners are against lending. People who borrow BTC usually use it to short Bitcoin. They bet against the asset and drive the market down. Is that in the best interest of MicroStrategy? Will they partake in the activity for the yield alone? Maybe they won’t. Maybe they’ll find a use case in which the lender doesn’t use their Bitcoin for nefarious purposes.
The other reason Bitcoiners are against lending doesn’t affect MicroStrategy. Hardcore Bitcoiners don’t lend their BTC because they don’t want to lose custody. Self-custody is paramount in Bitcoin culture, and the yield isn’t worth the risk of surrendering your BTCs to another entity.
If the rumors are true, Coinbase is already the custodian of MicroStrategy ’s Bitcoin. Make of that what you will.
There’s a second quote in the Bloomberg report that points to yet another option. This one might be more akin to what’s going on in the world, but, what do we know?