In 2023, the story of MicroStrategy in the financial market is like a maze adventure of capital, full of adventures with ambitious calculations. Its market value has soared from US$1.8 billion at the beginning of the year to the current US$111 billion. The driving force and logical chain behind this are intriguing. As a company with Bitcoin as its core strategy, MicroStrategy's actions not only serve as a bridge between traditional financial means and the cryptocurrency market, but also have a profound impact on the future of the web3 industry. Aiying FundInsight will provide an in-depth interpretation of MicroStrategy’s strategic logic in Bitcoin-driven, capital leverage and governance changes, as well as its implications for the entire web3 financial ecosystem.

1. Bitcoin driven: from fringe assets to core strategy

MicroStrategy's growth path is undoubtedly inseparable from its radical layout of Bitcoin. At the beginning of 2023, the company's market value was far lower than the value of its Bitcoin holdings. However, through large-scale financing and a series of high-risk capital operations, its market value is now 3.55 times that of its Bitcoin holdings, equivalent to 5.9% of the market value of Bitcoin.

Michael Saylor regards Bitcoin as digital gold that surpasses traditional currency, and uses this It builds the core logic of the company's growth as a foundation. In the context of web3, MicroStrategy represents a new type of enterprise that uses digital assets as its underlying support and attempts to use Bitcoin's long-term appreciation expectations to leverage traditional capital markets' confidence in the future. As the price of Bitcoin rises, MicroStrategy's market value also rises, and the capital market places high trust in its Bitcoin-driven premium.

However, the market’s attitude toward this “digital gold standard” strategy is not entirely consistent. Although some investors are confident about the future of MicroStrategy, and some even believe that its market value may surpass Bitcoin itself in the future, this idea is not recognized by all rational investors. The decentralized spirit of web3 and the volatility of Bitcoin make this speculation full of uncertainty. After all, market confidence is not static.

2. Leveraged capital operation: an innovative combination of dilution and zero-coupon bonds

MicroStrategy’s success lies not only in its choice of Bitcoin, a cutting-edge asset; How to profit cleverlyUsing traditional capital market tools, unprecedented capital leverage was obtained in innovative ways.

1. Equity dilution: Value-added dilution strategy

Aiying FundInsight observed that MicroStrategy’s financing methods mainly include two types: equity dilution and zero-coupon bonds.

(1) The process and logic of equity dilution

MicroStrategy raises funds by issuing additional shares. Spend almost all of your proceeds buying Bitcoin.

This approach forms a unique "value-added dilution" logic, that is, although the company dilutes the interests of existing shareholders, due to the expected value-added of Bitcoin , this dilution is instead interpreted by the market as an increase in asset value, which in turn drives up the company's stock price.

Binding shareholders’ interests. After each additional issuance of shares, the company immediately invests funds in the purchase of Bitcoin. This immediate reinvestment of funds makes shareholders Interests are closely tied to the long-term appreciation of Bitcoin. This contagion effect in financial markets continues to enhance investor confidence in the company's future. Many investors even view this as an indirect way to hold Bitcoin and are willing to pay an additional premium for this asset allocation model.

2. Zero-coupon convertible bonds: The game of capital return (1) Strategy for issuing zero-coupon convertible bonds:

Another financing method for MicroStrategy is through zero-coupon convertible bonds Financing with coupon bonds. In its most recent funding round, MicroStrategy expanded its bond size from $175 million to $2.6 billion with zero coupon.

Earnings are dependent on stock price growth: holders of these bonds do not receive traditional interest income, but have their income closely tied to the future growth of MSTR's stock price. They Can be converted into common stock of MicroStrategy at some point in the future, which means that the investor’s ultimate return is entirely dependent on the increase in MicroStrategy’s stock price, somewhat similar to the company’s employee options, which in turn are directly related to the value of the company’s Bitcoin holdings Related.

(2) Investors’ high-risk bets:

Investors bear high risks A risky bet. They chose to forego regular interest income and instead invest in MicroStrategy’s futureConviction has grown - especially its close ties to Bitcoin.

Nature of long-term call options: These bonds are essentially equivalent to a long-term call option, and investors can only profit if MicroStrategy's stock price rises significantly. . This potential source of income mainly depends on the trend of Bitcoin prices and the market's confidence in MicroStrategy's governance capabilities.

(3) Chain reaction in the capital market:

This financing method is not only Capital investment is more like a game with the future market. What this kind of game triggers is a huge chain reaction, each link is driving overall growth, and is full of delicate balance between high risk and high reward.

Synergy with equity dilution: MicroStrategy’s bond financing strategy complements its equity dilution, forming a unique capital operation model. This model resonates in financial markets, where market confidence in the company's future continues to drive capital inflows, and at the core of this game is a firm belief in Bitcoin and optimistic expectations for the future of the digital asset world.

3. Governance changes: from Saylor’s control to institutional governance

While capital is expanding, MicroStrategy’s governance structure has also undergone important changes. Michael Saylor's fall from the position of absolute control of voting rights marks the company's transformation from a "controlled company" to a more market-oriented and institutionalized governance model.

In the past, Saylor had the final say in company decision-making through control of Class B common stock, and MicroStrategy was therefore classified as a "controlled company" by NASDAQ ". However, with the issuance of a large number of Class A common shares, the voting advantage of Class B shares was diluted, and Saylor's voting rights dropped to less than 50%. As a result, the company was forced to set up an independent nomination committee, and board decision-making began to shift in a more collective direction. This change not only means that the company needs to be more transparent in response to market supervision, but may also bring more uncertainty to its future strategic decisions.

In the web3 ecosystem, the transformation of the governance structure often represents the company's transition from the radical growth stage of start-up to a more stable and sustainable development period. The case of MicroStrategy reflects the typical characteristics of this transformation: rapid expansion under individual leadership and gradual expansion under institutional governance.step specification. For the web3 industry that pursues the concept of decentralization, this change is also an inevitable trend for its internal power checks and balances.

4. In-depth thinking of Aiying FundInsight

MicroStrategy’s capital operation path triggered Aiying FundInsight in-depth thinking. Can such a strategy be sustainable, or how will it change the entire web3 financial ecosystem? Under the leadership of Michael Saylor, MicroStrategy has almost recklessly pushed Bitcoin into the center of traditional capital markets. Through a combination of equity dilution and zero-coupon bonds, the company made a bold move in the capital market, betting entirely on the long-term value of Bitcoin. But is this model a desperate gamble, or a forward-looking foresight of the future asset landscape?

Looking at it from a deeper perspective, MicroStrategy transformed the company into an indirect holding of Bitcoin by leveraging the belief of shareholders and bondholders in Bitcoin. Coin structured tools. It not only relies on the market's recognition of Bitcoin, but also opens up a new path in the financial field by linking traditional financing tools with digital assets. However, such a path is full of risks and uncertainties, especially when the price of Bitcoin fluctuates violently, the leverage risk faced by MicroStrategy will be sharply magnified.

What is more worth thinking about is the demonstration effect of this capital operation method on the web3 industry as a whole. Many companies may be inspired to follow MicroStrategy’s lead in structuring holdings and financing of cryptoassets as primary assets. However, in the absence of hedging means and diversified risk management, such a strategy is likely to bring systemic market risks. Although MicroStrategy's debt and equity dilution methods appear to be successful, the logic behind them is based on the premise that the price of Bitcoin continues to rise. Once this premise is shaken, the entire foundation of financing and growth will also be affected.

Aiying FundInsight believes that the MicroStrategy case is not only a profound experiment in new capital operations, but also a high-risk market gamble. It shows how web3 companies can use traditional financial markets to expand their digital asset holdings, but it also reveals the significant risks inherent in this strategy. If the market ecology of crypto assets can continue to be optimized in the future, MicroStrategy may become the pioneer of a new business model; but if the market situationIf sentiment reverses, such high-leverage operations may become a huge risk explosion point. And analysis of MicroStrategy's debt structure and potential risks.