The company founded by businessman Michael Saylor in 1989, formerly known as MicroStrategy, now goes by the simpler name Strategy – but one thing has not changed under the new brand: the company’s aggressive acquisition of Bitcoin.
Its new logo even features the Bitcoin symbol, making the founder’s strong commitment to the crypto asset unmistakably clear. In this report, we explain the rationale behind this intensification of their strategy and assess it from a risk analysis perspective.
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The strategy behind the Bitcoin purchases
Strategy pursues a unique approach by acquiring large amounts of Bitcoin using a mix of equity and debt. The company currently holds 528,185 BTC – which accounts for approximately 2.5 percent (!) of Bitcoin’s maximum supply. With a total value of around $43 billion at a Bitcoin price of $81,000, Strategy is by far the largest corporate holder of Bitcoin.
What’s particularly noteworthy is that Strategy not only uses its own capital but also borrows funds to expand its Bitcoin position. A significant portion of this financing is done through so-called convertible notes. These financial instruments give investors the option to convert their bonds into company shares under certain conditions, rather than demanding traditional cash repayment. This reduces the immediate pressure on Strategy to repay its debt from operating income or by selling Bitcoin.
In addition to convertible notes, Strategy also finances its Bitcoin purchases through preferred shares and traditional debt. Under the so-called “21/21 Plan,” the company intends to raise an additional $42 billion between 2025 and 2027 – split evenly between equity and fixed-income instruments – primarily to acquire more Bitcoin. Part of this includes perpetual preferred shares with a 10 percent coupon, which are being actively marketed to retail investors.
The big question for investors: How risky is Saylor’s strategy?
On one hand, using convertible notes for purchases provides the company with high flexibility. Since these are not directly backed by Bitcoin, there is no immediate risk of liquidation if the Bitcoin price crashes. Moreover, Strategy is not solely a Bitcoin purchaser – it still operates a profitable software division that generates about $463 million in annual revenue. This contributes to the company’s stability, as it can cover its annual interest and dividend obligations of around $228 million.
At the same time, Strategy’s business model is clearly heavily dependent on the price of Bitcoin. Should there be a severe crash in value, the company might be forced to sell parts of its holdings to meet its liabilities. However, a full liquidation to repay all debts would only be required if the Bitcoin price were to fall to approximately $20,143 – a drastic drop from current levels, though not entirely out of the question.
For comparison: In the summer of 2024, waves of sales from several major institutions placed significant downward pressure on Bitcoin’s price. When crypto exchanges Mt. Gox and Genesis, along with the German government, sold Bitcoin worth $16 billion, the asset lost over 11 percent of its value in just one month. History, however, shows that Bitcoin has always managed to recover from such shocks. So, while a forced sale of large holdings by Strategy could exert short-term pressure, it’s unlikely to trigger a lasting market crisis.
Conclusion: A bold, but not irrational bet
With its aggressive Bitcoin purchases, Strategy is betting on a long-term appreciation of the asset – mirroring the growing interest of governments and central banks in holding Bitcoin as a strategic reserve in anticipation of future gains. As a participant in a so-called “reserve race,” the company is relying on innovative financing structures that reduce its liquidation risk. Still, the model carries inherent dangers: a dramatic drop in Bitcoin’s price could increase the debt burden and place downward pressure on the company’s valuation.
For investors, this represents a risky but potentially highly profitable bet: those who believe in the long-term appreciation of Bitcoin might see Strategy as one of the most important players in the space – with all the opportunities and risks that come with it.
