MicroStrategy's Bitcoin Investment Strategy and Financial Risk Analysis

MicroStrategy has transitioned from a traditional software company to the largest Bitcoin holding institution in the world. 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. The market value of these Bitcoins at the end of 2024 is approximately $41.79 billion.

The company primarily raises funds to purchase Bitcoin through four main methods:

1. Use own funds to purchase (not exceeding 500 million USD)
2. Issue convertible preferred bonds
3. Issue Priority Guaranteed Bonds
4. Market Price Issuance of Stocks

Currently, MicroStrategy's total liabilities are $8.213 billion, total asset market value is $43 billion, and the leverage ratio is 19%. This means that the company may only face the risk of insolvency if the Bitcoin price falls below $16,500 for an extended period.

In the short term, the drop in Bitcoin prices mainly affects the company's financial statements and stock prices. In the long run, if Bitcoin enters a prolonged bear market, the company may face severe financing pressures.

Key financial data shows:

• The Bitcoin holding has a book value of approximately 23.9 billion USD, with a market value of around 41.79 billion USD.
• Total debt of approximately $8.2 billion, mainly consisting of low-interest convertible bonds.
• In 2024, the net cash flow from operations is expected to be a cash outflow of $53 million, with cash reserves of only $46.8 million.
• Software business revenue growth stagnated, with a year-on-year decline of 3% in 2024.

The company's stock price is highly correlated with the price of Bitcoin, with a correlation of 0.7-0.8. When Bitcoin hit a new high at the end of 2024, the company's stock price broke through $500, but then corrected by 50%.

In the short term, MicroStrategy still has strong debt repayment ability. However, if Bitcoin remains sluggish in the long term, it may trigger a financial crisis. Key risk points include:

• Bitcoin may face technical bankruptcy when it drops to $12,000-$15,000.
• Over $4 billion in debt will mature between 2027 and 2029.
• Founder Michael Saylor controls 46.8% of the voting rights, which may prevent the sale of Bitcoin.

Overall, MicroStrategy's financial condition is highly dependent on the price trend of Bitcoin. If Bitcoin continues to rise, the company will maintain strong growth; however, if it remains sluggish for an extended period, it may face a debt crisis or even the risk of bankruptcy.