Rachel, Golden Finance

In this bull market, MicroStrategy has become an undoubted star company because of its crazy buying of Bitcoin.

The current micro-strategic behavior of buying Bitcoin can be simply summarized as: issuing convertible corporate bonds to raise funds from the public, and then using the raised funds to purchase Bitcoins as corporate reserves. Because Bitcoin The rise continues, with microstrategy company valuations rising and stock prices rising.

This strategy is a win-win situation for both the company and the creditors who purchase the convertible bonds. The company’s valuation has spiraled upward while the creditors can either protect their capital and obtain interest, or they can Or enjoy the rise in stock prices after converting bonds into stocks with a micro strategy.

The risk is transferred to those investors who later buy micro-strategy stocks. As long as Bitcoin continues to rise, this strategy of issuing debt and buying coins can always be implemented. The micro-strategy for buying Bitcoin started in 2020, and the stock price has increased more than 20 times.

Seeing the huge profits behind the micro-strategy of issuing bonds and buying coins, some companies have followed suit. Most of these companies' main businesses are not on the blockchain. Thanks to the act of buying Bitcoin, their stock prices have also risen with the rise in Bitcoin prices.

MicroStrategy's stock price - the amplifier of Bitcoin price

In 2020, MicroStrategy began to purchase Bitcoin. He is also the first U.S. public company to integrate Bitcoin as a reserve asset.

The first acquisition announced by MicroStrategy included approximately 21,000 BTC, worth over $250 million, at a time when the price of Bitcoin was below $10,000.

Initially, it used cash purchases, and then switched to using the issuance and sale of stocks and convertible bonds to raise funds.

MicroStrategy’s current Bitcoin holdings have More than 380,000 Bitcoins were purchased. The most recent time, Bitcoins with a total value of approximately US$5.4 billion were purchased at an average price of US$97,862 per coin.

MicroStrategy was originally an intelligent software company. After buying Bitcoin, its company's image in the outside world became a "shadow company" of Bitcoin. From October 2000 to September 2020, MicroStrategy's stock price remained below $20 per share. As it continued to purchase Bitcoin, the rise and fall of its stock price began to be separated from its own business, and instead became a Bitcoin concept stock.

Also benefiting from the strategy of actively buying Bitcoin over the years, MicroStrategy’s stock price has soared more than 20 times from US$20 in 2020. The stock price of MicroStrategy has become an amplifier of the price of Bitcoin, and its increase in recent years has far exceeded that of Bitcoin.

Dismantling the micro-strategy model

In the early years, micro-strategy used cash to directly purchase Bitcoin, but now, it is issued and can be transferredDebt to buy Bitcoin. The process and principle of MicroStrategy issuing bonds to buy Bitcoin and then selling stocks are as follows:

1. Issuance of convertible bonds: MicroStrategy chooses to raise funds by private placement of convertible senior notes to qualified institutional buyers.

2. Attracting investors to purchase convertible bonds: Although micro-strategy convertible bonds have low coupon rates and high conversion prices, they are still attractive to some investors for the following reasons:

a. Low risk: Even if it is not converted at maturity, investors can get back their principal, unless the micro strategy fails.

b. Option value: Investors have options for a period of six years. Once the micro-strategy stock price rises above the agreed price, the stock exchange can be executed. From the perspective of the option market, the cost is low.

3. Use funds to purchase Bitcoin: MicroStrategy will use the funds raised through the issuance of convertible bonds to purchase Bitcoin and continue to increase its Bitcoin holdings.

4. Selling stocks: When the price of Bitcoin drops, micro-strategies may respond by selling stocks. On the one hand, stock sales can provide the company with additional funds to meet debt repayment or other funding needs to maintain the company's financial stability; on the other hand, by adjusting the holding ratio of stocks and Bitcoin, balance asset allocation and reduce Risks caused by Bitcoin price fluctuations.

5. Synergy and impact of the overall strategy:

a. Stock-currency relationship: Stock premium issuance to buy Bitcoin, promote Bitcoin rise, thereby increasing the company's net assets and earnings per share, forming a positive cycle. In addition, financing to buy coins accelerates profit growth and expands valuation multiples, causing stock prices to jump from linear growth to exponential growth. The increase in market value and stock price exceeds the increase in the price of Bitcoin itself.

b. Stock-debt relationship: The market value of micro-strategies has increased, pushing it to enter more indexes, trading derivatives have increased, and trading volume has increased, reducing stock and debt financing costs. The unique design of its convertible bonds, with options for stock conversion and cash repayment in micro-strategies, avoids default problems caused by the inability to repay the convertible bonds upon maturity, essentially becoming a "debt-equity" tool that is friendly to stock prices and shareholders.

c. Currency-debt relationship: Debt is denominated in US dollars, and its purchasing power tends to zero from a currency standard standpoint. However, the initiative to convert conditions lies in the micro-strategy, which uses this special "debt" to buy Bitcoins. In the long term, as long as the price of Bitcoin rises, the company will have the opportunity to earn huge profits and the risks will be controllable.

Companies that learn micro-strategy

Just buying Bitcoin can increase the stock price 20 times, and countless companies are jealous. I also learned micro-strategy.

For these companies, the most direct impact in the short term is that although the company's debt increases, it also receives an inflow of cash, which helps relieve the company's financial pressure. As Bitcoin rises, the value of the Bitcoin assets held by the company rises. For listed companies, their stocks will also become crypto concept stocks. As the crypto market rises,Rise and rise.

Especially in the second half of this year, listed companies have launched a Bitcoin spree. The following are some companies that use Bitcoin as asset reserves:

Marathon Digital:

Like MicroStrategy, this company, considered the world’s largest Bitcoin mining company, also issues convertible bonds to purchase Bitcoin.

According to HODL15Capital statistics, as of November 15, 2024, among the currency holdings of publicly listed Bitcoin mining companies, Marathon Digital topped the list with 27,562 Bitcoins.

In November 2024, it issued 1 billion convertible bonds, and the company plans to use approximately $199 million of these proceeds to repurchase $212 million of 2026 convertible bonds. Remaining funds will be used for Bitcoin acquisitions and general corporate purposes, including potential strategic acquisitions, asset expansion and debt repayment.

Its earliest purchase was in July 2024, when the company purchased 2,282 Bitcoins for US$120 million, and then began selling US$250 million in private bonds to buy Bitcoin again.

Nilam Resources:

On March 25, 2024, Nilam Resources, a gold mining company located in South America, announced plans to acquire approximately US$1.7 billion through the issuance of senior Series C shares. of 24,800 Bitcoins. The main purpose of the transaction is to acquire MindWave, a special purpose entity located in Mauritius that holds a large number of digital assets including Bitcoin. These assets will serve as collateral for the company's further investments in high-yielding projects. The acquisition was reached by signing a letter of intent (LOI) between Nilam and Xyberdata Ltd., and is planned to be completed through equity swap. Nilam believes that this move will help it explore the digital asset market and expand financing channels.

SOS Ltd.:

This is a company listed on the New York Stock Exchange with artificial intelligence and blockchain as its core technologies. On November 27, 2024, it announced Its board of directors has approved a plan to invest $50 million in Bitcoin (BTC), aiming to strengthen its blockchain industry layout.

Previously, the company had been investing in crypto mining companies for many years. As early as 2020, SOS announced that it would spend approximately US$20 million to purchase 14,238 Bitcoin mining machines and 1,408 Ethereum mining machines; in 2023, SOS announced the launch of more than 5,000 self-owned mining machines at its Texas hosting center. It has signed a custody agreement with Bitmain to host a total of 6,000 mining machines until August 20, 2025.

In order to maximize the return on investment and reduce the risk of market fluctuations, SOS plans to use a variety of quantitative trading strategies such as investment, trading and arbitrage strategies to help the company in the current situation.Achieve solid returns in the current market environment while further optimizing the investment portfolio over time.

Metaplanet:

This is an investment company located in Japan, mainly focusing on investments in high-tech and innovative fields, especially in artificial intelligence, blockchain technology, financial technology, etc. There is a layout in place and it is already on the market. On November 28, 2024, it announced plans to raise up to 9.5 billion yen (approximately US$62 million) through new share subscription rights to accelerate the accumulation of Bitcoin.

Earlier this month, it also said it would issue ordinary bonds (guaranteed) totaling 1.75 billion yen (approximately US$11.3 million) with an annual interest rate of 0.36% and a term of one. Year. Proceeds will be used to purchase Bitcoin.

Since April 2024, it has continued to accumulate Bitcoin and regarded Bitcoin as its strategic financial reserve asset. Because of this behavior, it is called "MicroStrategy of Asia". As it continues to buy Bitcoin, its stock price continues to rise as the price of Bitcoin rises, just like the micro strategy.

Boya Interactive:

The company is a developer and operator in the card and board game industry. It was established in 2004 and listed on the Hong Kong Stock Exchange in 2013. It will start buying cryptocurrencies in 2023, including Bitcoin, Ethereum, and USDT. When the price of Bitcoin exceeded US$90,000 on November 12, 2024, Boyaa Interactive voluntarily disclosed its position status: the company held 2,641 Bitcoins and 15,445 Ethereum coins, with total costs of approximately US$143 million and US$42.5781 million respectively, and the average cost was approximately US$54,000/piece and US$2,756/piece. The floating profit was nearly US$100 million.

Tesla:

Since 2021, Tesla has continued to buy Bitcoin, and of course will also choose to sell it. According to arkham data, Tesla holds 11,509 Bitcoins.

SpaceX:

The company led by Elon Musk reportedly also holds Bitcoin, but the exact amount has not been made public. SpaceX is estimated to hold several thousand BTC in its corporate vaults.

Block.one:

The parent company of EOS, it is reported that it holds as many as 140,000 Bitcoins, but the company’s actual Bitcoin holdings and related investments Details have not been fully disclosed.

Block Inc.:

An American payment company, its co-founder Jack Dorsey announced that starting from April 2024, Block will make a monthly profit from Bitcoin-related products. Use 10% of your profits to buy Bitcoin. It first started buying Bitcoin in October 2020, according toAccording to data from the buybitcoinworldwide website, as of September 18, 2024, Block, Inc. held 8,211 Bitcoins.

Nexon Co Ltd:

A Korean company specializing in the creation of video games. He started buying Bitcoin in April 2021 and is reported to have spent about $100 million in total, purchasing 1,717 Bitcoins.

Linekong Interactive:

Linekong Interactive, a Hong Kong-listed gaming company, has purchased cryptocurrency many times since 2023. Purchased 19.3808 Bitcoins between June 30, 2023, and July 7, 2023, for a total value of approximately $590,000. Previously, between June 6 and June 15, it spent $650,000 to buy 24.8932 Bitcoins. On September 13, 2024, during the previous 12-month period, the company purchased a total of 93.85 Bitcoins, spending $2.7 million. In November 2024, Linekong Interactive announced the launch of the US$15 million Bitcoin Network Ecological Investment Management Fund BTC NEXT.

Linekong Interactive is actively developing Web3 and has a close relationship with founder Wang Feng.

Yingcosmos:

This is the parent company of Yingke APP and has been listed on the Hong Kong stock market. It announced in March 2024 that its board of directors had approved a budget of US$100 million for the company to purchase cryptocurrencies on any regulated and licensed trading platform within the next five years.

Of this US$60 million, US$60 million will be used to purchase Bitcoin, approximately US$20 million will be used to purchase Ethereum, and approximately US$10 million each will be used to purchase USDT and US dollars respectively.

Guofu Innovation:

Guofu Innovation, a financial company listed on the Hong Kong stock market, announced in August 2024 that the company had purchased a total of HK$36 million between March and August. Bitcoin.