MicroStrategy's Bitcoin Adventure: A Corporate Financing Revolution

MicroStrategy, led by Michael Saylor, not only bets on Bitcoin but also pioneers a new model of corporate financing. This publicly traded company cleverly utilizes traditional financial tools to attract investors with the allure of Bitcoin.

On New Year's Eve 2024, Saylor hosted a grand party at his Miami mansion to celebrate Bitcoin surpassing $100,000. Over 500 guests gathered, including executives from the Bitcoin industry and institutional investors. The party was filled with Bitcoin elements, showcasing the fervent atmosphere of the cryptocurrency community.

Saylor himself mingled among the crowd, warmly interacting with guests. For him, Bitcoin is a second spring for his career. During the internet bubble, he once had a net worth of over a hundred million but suffered heavy losses. In 2020, he decided to make Bitcoin the core strategy of MicroStrategy, and the company's fate was changed as a result.

With the approval of the Bitcoin ETF and the surge in price, MicroStrategy's stock price skyrocketed by over 700% in 2024. The company's holdings of 470,000 Bitcoins have soared in value, and Saylor's net worth has reached $9.4 billion. Despite critics questioning the company's high valuation, Saylor skillfully leveraged the rules of both traditional finance and the cryptocurrency sectors.

MicroStrategy raises funds to purchase Bitcoin by issuing low-interest or zero-interest convertible bonds. The high volatility of the company's stock increases the value of these bonds, attracting institutional investors. This model creates a virtuous cycle: issuing bonds and stocks, purchasing Bitcoin, driving up stock prices and volatility, and issuing more bonds again.

Saylor invented the "Bitcoin yield" indicator, which, although not very significant, has attracted followers. The company plans to raise $42 billion over the next three years to purchase more Bitcoin. As long as the price of Bitcoin continues to rise, this strategy can be sustained.

Analysts believe that unless Bitcoin crashes by more than 80% and remains at that level for two years, MicroStrategy will not face any repayment risks. The company's first-mover advantage and scale allow it to dominate the market for Bitcoin-related financial products.

Despite the constant emergence of imitators, MicroStrategy still maintains its lead. Saylor firmly believes that Bitcoin is the future and that traditional business wisdom is outdated. He stated: "We are sitting on a high-speed train while others are standing still on the sidelines."

This is not Saylor's first adventure. He has experienced the ups and downs during the internet bubble, going through corporate stock price crashes and regulatory investigations. In 2020, he identified Bitcoin as the best choice to combat inflation and began this bet.

Nowadays, more and more companies are following MicroStrategy's lead in holding Bitcoin. Changes in accounting standards may accelerate this trend. For Saylor, this validates his point: "Cash is trash."

Saylor reflected: "I invented 20 products but failed to change the world. Satoshi Nakamoto created one thing and changed the world. Ironically, embodying his spirit has made me more successful than before. This is a lesson in humility."

The story of MicroStrategy reminds us that opportunities sometimes come around again, and the key lies in having the keen insight to seize them.