Bitcoin Investment Pioneer: Exploring the Capital Operation Model of MicroStrategy

I. Background Introduction

Originally focused on business intelligence solutions, MicroStrategy shifted its focus to Bitcoin investment starting in 2020. By issuing stocks and convertible bonds to raise funds to purchase Bitcoin, it became the focal point of the U.S. stock market. In February 2025, MicroStrategy officially renamed itself to Strategy, holding approximately 470,000 Bitcoins at that time, which accounted for about 2% of the global Bitcoin supply. By February 21, 2025, the company had accumulated nearly 500,000 Bitcoins, valued at over $40 billion.

MicroStrategy essentially transforms the stock market into a Bitcoin financing channel through capital structure design - raising funds to increase Bitcoin holdings by issuing new shares/convertible bonds, and then using Bitcoin holdings to support stock price valuation, creating a capital closed loop deeply bound to crypto assets. With this high-premium financing mechanism, MicroStrategy not only stands out among Bitcoin concept stocks but has also developed a "alchemy" recognized by the U.S. stock market.

2. The Logic Behind MSTR Stock Price Speculation

MicroStrategy's financing method mainly relies on a combination of stocks and bonds to raise funds. Initially, it depended on bond issuance and its own cash reserves, along with some common stocks and convertible bonds. This round of financing makes large-scale use of the ATM( At-the-market) stock issuance mechanism, directly selling stocks in the secondary market.

MicroStrategy operates in the capital market through a strategy that combines stock issuance and bond issuance. When the leverage ratio is low, it quickly raises funds by issuing new shares to buy Bitcoin, thereby increasing leverage and enhancing its valuation premium when Bitcoin rises. During the bull market, its premium once reached as high as 300%.

As the market became aware of MicroStrategy's large-scale stock sell-off, the stock price began to decline, and the premium narrowed. At the same time, the leverage ratio decreased, and the company gradually shifted to a debt issuance-centric financing approach. This led to a slowdown in MicroStrategy's pace of Bitcoin purchases, and the demand for Bitcoin in the market also started to weaken.

Overall, MicroStrategy uses different financing strategies in different cycles, taking advantage of the high premium in the stock market while steadily leveraging through bonds. For Bitcoin, a slower pace for MicroStrategy may indicate a weakening of upward momentum for Bitcoin in the short term; for MicroStrategy, this diversified financing approach allows it to respond flexibly in different market environments.

The main reasons behind the significant fluctuations in MicroStrategy's stock price include:

1. The nonlinear relationship between stock prices and Bitcoin
2. The impact of narrowing premium on stock prices
3. As a "proxy investment" tool for Bitcoin
4. The marketing strategy of founder Michael J. Saylor
5. The company's unique financing capabilities and investment model

3. Michael J. Saylor's Bitcoin Evangelism Journey

Michael J. Saylor, through frequent public appearances, interviews, and speeches, has not only brought Bitcoin into the spotlight but also attracted a large number of institutional investors into the market. MicroStrategy and ETFs have become the two main buyers in the current Bitcoin market, with MicroStrategy's operations being particularly noteworthy due to its strategy of only buying and not selling.

Saylor's marketing tactics are quite sophisticated. He once stated that he has set up a will and plans to destroy the private keys of the Bitcoin he personally holds after his death. This "cult-like" operation injects a dose of excitement into the market. It is worth noting that the Bitcoin of MicroStrategy is actually managed by credible third-party custodians Fidelity and Coinbase Custody, complying with the auditing and regulatory requirements of publicly listed companies.

Saylor not only promotes Bitcoin investment but also proposes a grander vision, including integrating Bitcoin into national strategic reserves and advancing the on-chain and tokenization of global assets. His perspective has transcended mere Bitcoin extremism, demonstrating insight into the application of blockchain technology across a wide range of fields.

4. MicroStrategy's Asset Game Strategy

Although the price of Bitcoin has fallen back to around $87,000 from its high, and MicroStrategy's holding cost is about $66,000, the company does not face immediate financial pressure. Even during the last bear market when its net assets were negative, MicroStrategy was not forced to liquidate or sell Bitcoin, mainly because:

1. The debt maturity date is relatively far off.
2. Founder Michael J. Saylor holds nearly half of the voting rights.
3. Flexible financing methods ( bond issuance, stock issuance, mortgage loans, etc. )
4. The main debt will not mature until 2028 at the earliest.

An increasing number of sovereign funds and institutions worldwide are beginning to view Bitcoin as a reserve asset, and this trend supports MicroStrategy's long-term strategy. While Bitcoin's price may experience fluctuations in the short term, in the long run, MicroStrategy's strategy appears to align with the market trend.

However, MicroStrategy's model also faces some potential challenges and issues worth considering:

1. Can the volatility of the Bitcoin market maintain its current level?
2. How long can the company's financing methods last?
3. Is Michael J. Saylor an idealist or an arbitrageur in Bitcoin?

5. Risks and Opportunities of Investing in Micro Strategy Stocks

MicroStrategy stock ( MSTR ) can be seen as an "accelerated version" of Bitcoin, with its stock price being more sensitive to fluctuations in Bitcoin prices. The leverage effect of MSTR may allow it to achieve greater gains when Bitcoin rises, but the risk of decline also correspondingly increases.

Investors need to weigh the following factors:

1. The company's traditional software business revenue growth has stagnated.
2. Highly dependent on the rise in Bitcoin price
3. The sustainability of the strategy of continuously issuing bonds and diluting equity to purchase Bitcoin.
4. The company's core business profitability is limited.
5. The uncertainty of Bitcoin's future price trends

MicroStrategy's financing model cleverly shifts risk from the company to the stock market by issuing convertible bonds to finance the purchase of Bitcoin, potentially converting the debt into equity when the debt matures. This operation results in the overall long-short odds in the stock market being greater than those in the crypto market.

Overall, MSTR stock provides investors with an indirect way to participate in the Bitcoin market, but it also comes with higher risks. Investors need to fully understand the company's operating model and the characteristics of the Bitcoin market, and carefully evaluate their investment decisions.