This morning MicroStrategy (MSTR) announced it bought another 51,780 BTC for $4.6 billion. They also announced they would convert another $700 million loan to buy more Bitcoin.
MARA Holdings (MARA) a company I own also announced a $700 million convertible note to buy BTC.
On top of that Semler Scientific (SMLR) raised $21 million to buy 215 BTC, and Metaplanet (3350.T) issued 1.75 billion yen to buy more.
The corporate Bitcoin race is heating up.
I first recommended MicroStrategy late last year on the looming Bitcoin halving. At the time it was trading at $35. Today it closed at $384. If you held you would have had a ten-bagger in about a year.
The Hunt Brothers
The current situation in BTC makes me think of the time the Hunt brothers tried to corner the market in silver in 1979.
The same could happen with BTC today and it’s not like they aren’t trying. The top 15 holders of BTC own 7.5% of it.
The mysterious creator of Bitcoin, Satoshi Nakamoto holds 1.1 million BTC. Major exchanges like Binance and Bitfinex also hold significant amounts of Bitcoin, with wallet addresses associated with these exchanges appearing in the top 10 list. These addresses hold billions of dollars’ worth of BTC.
Further down the list are celebrity Bitcoin holders including Brian Armstrong, CEO of Coinbase, Michael Saylor, CEO of MicroStrategy, Tech billionaire Tim Draper, and the Winklevoss Twins. RFK Jr. has also stated that his fortune is tied up in the crypto coin.
Who were the Hunt Brothers?
The Hunt brothers were the scions of Texas oil tycoon H.L. Hunt. After having his oil wells confiscated by the Lybians in 1973 the leading son Bunker started investing in silver to take advantage of the inflation which was running hot at the time.
Bunker reasoned: “Silver looked safer than overseas oil concessions, the way things were going. And precious metals were a good hedge against paper money.”
According to Time Magazine April 7, 1980:
There were other factors: world demand for silver, spurred largely by its use in photographic materials, regularly exceeds new production from mines, and Hunt believed silver was greatly undervalued in relation to gold. Bunker and his brother Herbert bought in 1973 an astonishing 35 million oz. in futures contracts. Their buying drove prices up for a while, but when the brothers stopped their purchases, prices fell again. The Hunts lost an estimated $25 million to $50 million on paper. Undeterred, Bunker called for actual delivery of the metal, a rare occurrence in commodity markets, and just kept it.
Last year (1979) Bunker and his syndicate began buying silver again, this time on a truly gargantuan scale. They were soon imitated by other speculators shaken by international crises and distrustful of paper money. It was this that sent the price of silver from $6 per oz. in early 1979 to $50 per oz. in January of this year. Chairman Walter Hoving of Tiffany & Co., the famous jewelry store, was incensed. Tiffany ran an ad in the New York Times last week asserting: “We think it is unconscionable for anyone to hoard several billion, yes billion, dollars worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver from baby spoons to tea sets, as well as photographic film and other products.”
At one point it is speculated that the Hunts owned two-thirds of the silver market not owned by governments.
The Party Didn’t Last
Soon the regulators got involved. COMEX initiated “Silver Rule 7” which put restrictions on margin accounts. The frenzy dried up and the price of silver dropped 50% over the next four days, by 1982 silver was back to $4 an ounce but it didn’t finally bottom until the early 2000s.
In the end, the Hunts lost more than a billion dollars in the affair and their fortune kept declining. In 1980 they were worth $5 billion but by 1988 their fortune was little more than $1 billion.
RIght now there are a little more than 19.9 million BTC that have been mined out of a total 21 million that will be mined by 2140. It would seem probable that a buying frenzy to corner the market in BTC will happen at some point.
All the best,
Christian DeHaemer
Outsider Club
Russia, Russia, Russia: https://www.outsiderclub.com/russian-uranium-ban/
Deep Moats: https://www.outsiderclub.com/behold-the-power-of-a-deep-moat/
He’s Gone: https://www.outsiderclub.com/buffett-sells-high/
