Key Insights:
MicroStrategy plans to buy $42 billion worth of Bitcoins, out of which $18.35 billion has already been spent.
Over the next couple of years, it plans to buy Bitcoins worth $13.65 billion.
MicroStrategy uses debt, convertible bonds, equity sales, and private bond sales to finance its Bitcoin purchases.
Currently, it sits on a $20 billion profit and owns 450k Bitcoins at a $48 billion valuation.
With its two latest purchases of 2,530 and 1,070 Bitcoins in January 2025, MicroStrategy now holds 450k Bitcoins or around 2.14% of the total Bitcoin Supply. The firm now holds $48 billion worth of Bitcoins acquired at an average cost of $63k per BTC.
Out of all these, in 2024 alone, it purchased a massive 258,320 Bitcoins for $22 billion.
At present, the company makes a massive $20 billion profit from all its Bitcoin purchases, which translates to roughly 73% in profits in terms of net yield.
Once called foolish for its strategy of acquiring Bitcoin, the company is now praised by top fund houses, entrepreneurs, billionaires, and corporate houses for its achievement.
Contrary to the widespread belief that MicroStrategy buys Bitcoin with just debt, the company leverages equity financing, debt, convertible bonds, preferred shares, and multiple other sources.
In September 2024, MSTR, which then owned 252k Bitcoin, announced a bold plan to acquire $42 billion worth of Bitcoins over the next two to three years (until 2027). Since then, it has acquired 248k more Bitcoins worth $18.35 billion.
The most popular method of buying Bitcoin remains its public debt financing. MicroStrategy issues convertible debt that provides it with long-term sustainable debt without the risk of default. This is so because investors can convert the debt into company shares at a pre-determined value.
Usually, it yields benefits for the creditor as well as the debtor. The creditors (investors) get to own shares of MicroStrategy in the future and have capital protection in the present. For MicroStrategy, there is no risk of default. If the company defaults, which is likely given the volatility of Bitcoin, the creditor can redeem shares and sell them without MicroStrategy losing the custody of the Bitcoins.
This win-win situation is not seen in traditional debt, wherein if the borrower fails to pay money, all the assets are seized and auctioned.
MicroStrategy used this method to acquire Bitcoin in mid-November when it acquired nearly $1.5 to $1.75 billion worth of Bitcoins from the private sale of its bonds.
It is not publicly known, but major funds from Japan, the US, and Europe own considerable MSTR shares. They buy these shares because, due to traditional market regulations, it is very difficult or impossible for them to own Bitcoin. On the other hand, buying MSTR allows them to own Bitcoin indirectly.
MicroStrategy is able to attract investors because of its valuations. At a PE ratio of 6.18, it is one of the most undervalued shares. Further, in terms of assets owned, Bitcoin ranks 7th in the global markets and could soon be the largest asset, beating Gold. This aspect, too, works in MSTR's favor.
In Q4, roughly 28% of all crypto investments could be attributed to MSTR's Bitcoin buying. In a post, the company boasted a yield of 48% in the quarter. However, more details will only emerge after Q4 reports are released.
With MicroStrategy looking to buy $2 billion worth of Bitcoins in Q1 of 2025, we can only assume that the journey has just started. Over the next couple of years, i.e., till 2027, MicroStrategy will own roughly $60 to $80 billion in Bitcoin (rough estimates because the price of Bitcoin fluctuates).
This year, it plans to buy roughly $13.65 billion more (including the $2 billion in Q1). However, if the markets are correct and there are favorable fundamental developments, the company could accelerate its buying.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.