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operation_saylor/plan.md
pablo 5e5ae0078e .
2022-07-18 23:24:29 +02:00

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Operation Saylor plan

The idea of Operation Saylor is to:

  • Borrow money from the bank through a personal loan.
  • Quickly DCA the loan into BTC.
  • Pay the loan back by slowly turning as-small-as-possible amounts of BTC into fiat as-late-as-possible.
  • Hope that, by the time the loan is paid back in full, there is some BTC left. And hopefully, with a decent economical value.

Loan conditions

The loan I can get through my usual bank (Bankinter) comes with the following conditions:

  • Principal: 33.000€
  • 120 installments in 120 months
  • APR 5,99%, APY 6,16%
  • Each installment would be of 366,20€
  • Early amortization penalty of 1%
  • No opening costs

Capital deployment and transacting

The whole operation will be undercover, tax-wise. All buys and sells will happen P2P through bisq (or any better KYC-free service that appears in the future) and won't be reported to any tax office.

To minimize the risk of entering in the very-worst-moment, the loan principal will be used to purchase BTC in equal fiat amounts during six months. Not all of it will be deployed: the equivalent to 3 months of installments will be left in fiat. Any time this small fiat amount goes below two installments, a small piece of BTC will be sold to have at least 3 installments in the account again.

To be quiet and secretive, the purchases during the first six months will happen through four different bank accounts. That will spread the volume enough across different entities so that no single observe can realize the actual extent of the operation purchases.

Since the loan amount is 33.000€ and the entry DCA period 6 months, the monthly buy should be around 5.000€ per month.

BTC funds storage

The BTC funds from the operation will be stored in two locations:

  • A small stash of (initially) 0.1 BTC will be kept in the bisq hot wallet for convenience when turning BTC to fiat to pay installments.
  • All the rest of the BTC will be stored in a BTC cold wallet. The seed phrase will be generated with a Coldcard MK3. Paper copies will be left in the usual locations. A xpub will be used to set up a watch only wallet, and also kept in this repository in case that wallet fails.

Accounting

I will keep the accounting from Operation Saylor as separate as possible from my personal accounting. I want to track the performance of this Operation on its own, without blurring it because it gets mixed with my personal finances. Even so, there is an issue: the fiat I will be using during Operation Saylor needs to live in my own personal fiat accounts. If I don't record that fiat in my ledgers, I won't ever be able to properly reconcile my fiat balances without tremendous effort and a high chance of screwing up, with the awful consequences of the confusion that would come forth.

To fix this, I will include the fiat amounts in my personal accounting in the following way: I will open sub-accounts for Operation Saylor in the four fiat accounts I am planning on using. All the money related to the Operation will be recorded in these "virtual" accounts. This way, I will keep it separate from my personal balance and still be able to reconcile the total account balance with what will appear in my online banking systems. The origin of these funds will be a liability account, reflecting that this money doesn't really belong to " me", but rather to Operation Saylor.

Regarding the BTC balance and all purchases and sales, I will run a separate spreadsheet to record those. That will enable a more flexible tracking and playing around with data than what gnucash would allow me to, and the operations are going to be simple enough so that the serious ledger is not missed.

Expected results

TODO: Summarize the outcomes of my little simulation engine.

Evangelizing

Operation Saylor is a financial movement that is typically touted as suicidal and irresponsible. Although it is indeed a very risky movement, I think that the online community has developed a certain degree of dogmatic rejection about leveraging to invest in BTC long term. People just mindlessly repeat "don't get a loan to invest" without providing any thoughts to the nuances around it or being open to discussing why is it a bad idea.

I think that, with a loan like the one I am getting (uncollateralized, no margin call) Operation Saylor is not a stupid idea. It is indeed risky, and there is a chance that I will lose an important chunk of money. So I would like to spark up debates across the community to fight the rejection dogma, in the hope that some people might actually discover that this movement suits their own investment preferences.

To do this, I will post a monthly update on stacker.news. On every update, I will provide a standard report on how things are going (BTC balance, outstanding debt, money invested vs current net worth) + an additional, brief reflection from my side. This could be about the reasoning that led me to run Operation Saylor, comparing this strategy to a DCA, discussing the fundamentals that make the operation sensible from a theoretical point of view, etc.

I hope it would get the same kind of traction that the Early Retirement by Bitcoin blog would get. I feel there is something addictive about these monthly updates with real people and real numbers and seeing how well or how bad they are doing. It's as if you were sharing the greed and excitement with them.