Bitcoin Investment and Capital Operations: The Strategic Path of Strategy

Since 2020, the enterprise software company Strategy(, originally focused on business intelligence solutions and formerly known as MicroStrategy), has shifted its focus to Bitcoin investment. By raising funds through the issuance of stocks and convertible bonds to purchase Bitcoin, the company quickly became a focal point in the US stock market. As of February 21, 2025, Strategy has accumulated nearly 500,000 Bitcoins, valued at over $40 billion.

The essence of Strategy is to design the capital structure in such a way that the stock market becomes a Bitcoin ATM - raising funds to increase Bitcoin holdings through the issuance of new shares or convertible bonds, and then using the Bitcoin holdings to support the stock price valuation, forming a capital closed-loop deeply bound to crypto assets. With this high premium financing mechanism, Strategy not only dominates among Bitcoin concept stocks but also has developed a "alchemy" recognized by the US stock market through equity issuance and coin price manipulation.

The financing method of Strategy mainly relies on a combination of stocks and bonds to raise funds. Initially, it mainly depended on bond issuance and its own cash reserves, as well as some common stock and convertible bonds. In this round, a large-scale use of the ATM( At-the-market) stock issuance mechanism, which means directly selling stocks in the secondary market.

The strategy flexibly employs financing strategies across different cycles, taking advantage of the high premium in the stock market while steadily leveraging through bonds. For Bitcoin, a slowdown in the strategy may indicate a weakening of short-term upward momentum; for the strategy, this diversified financing approach allows it to respond flexibly to different market environments.

Behind the significant fluctuations in Strategy stock prices, there are several key factors:

1. The stock price and Bitcoin have a nonlinear relationship, rising and falling not completely in sync.

2. Compared to the previous premium, it is gradually shrinking. Company executives emphasize the volatility of the stock, promoting it as a high-volatility speculative tool.

3. The "proxy investment" option for institutional investors who cannot directly purchase Bitcoin ETFs.

4. Company executives are adept at marketing and emphasize the leverage effect of Strategy stocks relative to Bitcoin.

5. The uniqueness of Strategy lies in its strong financing capabilities and the marketing skills of its executives, packaging the company as a "super leverage tool" to attract global speculators.

The founder of Strategy frequently appears in public, accepts interviews, and gives speeches, which not only brings Bitcoin into the spotlight but also attracts a large number of institutional investors to the market. Currently, Strategy and ETFs are the two main buyers in the Bitcoin market, but Strategy's "buy and never sell" strategy is even more remarkable.

The founder once stated plans to destroy the Bitcoin private keys he personally holds after his death, a "cult leader-level" operation that injects excitement into the market. However, the Bitcoin of Strategy is actually held by a trusted third party, in compliance with the audit and regulatory requirements for listed companies.

The founder is not only a strong proponent of Bitcoin but also proposed the vision of putting all assets on-chain and tokenizing them to support the development of the entire digital economy. He even suggested incorporating Bitcoin into the U.S. national strategic reserve to enhance America's leadership position in the global digital economy.

However, this decentralized on-chain economic pattern will also bring new challenges to global capital flow and regulation. Especially if the United States dominates this on-chain economy, other countries or organizations will face greater pressure of capital outflows. Traditional regulatory measures may become ineffective in the face of a decentralized economy.

Currently, the price of Bitcoin has retraced from its high to around $87,000, while Strategy's holding cost is approximately $66,000. Even if the price of Bitcoin falls below the cost price, it is unlikely that Strategy will be forced to liquidate or sell off in large quantities. This is mainly due to:

1. The founder holds nearly half of the voting rights, making it difficult for the liquidation proposal to pass.

2. The main debts will not mature until 2028 at the earliest, and no one can force the company to make unfavorable decisions in the short term.

3. Have flexible means of response, such as issuing bonds, increasing stock issuance, or using Bitcoin as collateral for loans.

4. Global institutions view Bitcoin as a reserve asset, and the long-term outlook remains positive.

Although Strategy's financial situation may face challenges in the future, there is currently no risk of liquidation or forced selling considering the debt maturity and market trends. On the contrary, the company may take advantage of the current market conditions to continue accumulating Bitcoin and solidify its position in the cryptocurrency space.

The capital operation model of Strategy is timely, but its stock investment still carries risks. For crypto insiders, the odds of Strategy stocks may be greater than directly participating in Bitcoin, resembling a "accelerator version" of Bitcoin. However, the company's core business struggles to generate significant profits and is overly reliant on the rise of Bitcoin prices, which also brings certain risks to the company.