Analysis of MicroStrategy's Bitcoin Investment Strategy and Financial Status

MicroStrategy has transformed from a traditional software company into the world's largest Bitcoin holding institution. As of the end of 2024, the company holds approximately 471,107 Bitcoins, with a total cost of about $27.97 billion and an average purchase price of around $62,500 per coin. By the end of 2024, the market value of these Bitcoins is approximately $41.79 billion.

MicroStrategy primarily raises funds to purchase Bitcoin through four methods:

1. Use own funds, approximately 500 million dollars.
2. Issue convertible preferred bonds with a lower interest rate, even zero.
3. Issue priority guaranteed bonds, such as the 6.125% interest rate bonds maturing in 2028.
4. Issuance of stock at market price, raising funds through the issuance of additional shares.

Currently, MicroStrategy's total liabilities are $8.213 billion, total assets are valued at $43 billion, and the leverage ratio is 19%. This means that the price of Bitcoin needs to drop below $16,500 and remain there until 2028 or longer for the company to be insolvent.

The company proposed the concept of "BTC Yield," which refers to the Bitcoin yield per share, to explain the reasonableness of issuing additional stocks. In 2024, MicroStrategy's BTC Yield is 74%, currently 6.9% for 2025, with a target of reaching 15% by the end of the year.

In the short term, Bitcoin price fluctuations will affect MicroStrategy's financial report performance, but will not trigger additional margin call risks. In the long run, if Bitcoin enters a prolonged bear market, the company may face serious financing pressure.

Key Financial Data Analysis:

• The book value of Bitcoin holdings is approximately $23.9 billion, with a market value of approximately $41.79 billion.
• Total debt is approximately $8.2 billion, mainly in convertible bonds with a relatively low coupon rate.
• In 2024, the net cash flow from operations is expected to be a cash outflow of 53 million dollars, with cash reserves of 46.8 million dollars.
• Software business revenue growth has stagnated, with a year-on-year decline of 3% in 2024, contributing approximately $500 million in revenue for the year.

MicroStrategy's stock price is highly correlated with the price of Bitcoin, with a correlation of 0.7-0.8. By the end of 2024, when Bitcoin approaches $100,000, the company's stock price skyrocketed to over $500, followed by a 50% correction.

In the short term, MicroStrategy still has strong debt repayment ability. However, if Bitcoin enters a long-term bear market, it may trigger financial difficulties. Key factors include:

• Debt-to-asset ratio: If Bitcoin falls to $12,000-$15,000, a technical bankruptcy may occur.
• Debt maturity risk: Over $4 billion in debt will mature from 2027 to 2029.
• Management stance: Founder Michael Saylor controls 46.8% of the voting rights, which may prevent the company from selling Bitcoin or changing its strategy.

Overall, MicroStrategy's financial situation is closely related to the price trend of Bitcoin. If Bitcoin remains depressed for a long time, the company may fall into a debt crisis; conversely, if Bitcoin continues to rise, the company will maintain strong growth.