What is MicroStrategy? Bitcoin as a Corporate Strategy

MicroStrategy, now officially called Strategy, is an American technology company that became globally known for its bold decision to place Bitcoin at the center of its corporate strategy. While the company originally focused solely on software and data analytics, its focus quickly shifted to digital assets, with Bitcoin as the core. This strategic shift sent shockwaves through both the traditional financial world and the crypto space. Strategy is often cited as the prime example of a publicly traded company that views Bitcoin not as an experiment, but as a fundamental part of its balance sheet and long-term vision. The company has paved the way for institutional adoption on a scale that was previously unimaginable. In this comprehensive article, you will learn what MicroStrategy is, why it is now called Strategy, how the company uses Bitcoin as a corporate strategy, and the opportunities and risks involved.

Key Takeaways

• MicroStrategy is now officially called Strategy to highlight its new focus.
• The company was the first publicly traded firm to adopt Bitcoin as its primary reserve asset.
• Strategy owns one of the largest Bitcoin positions in the world, larger than many governments.
• The stock price (MSTR) often acts as a leverage on Bitcoin‘s price.
• The strategy is driven by Michael Saylor‘s vision and has drawn both praise and criticism.

Introduction: Transforming a Software Company

For decades, MicroStrategy was regarded as a solid but relatively niche software company in the Business Intelligence (BI) sector. In the summer of 2020, amidst global economic uncertainty, the company suddenly came into the international spotlight by announcing that it had converted $250 million of excess cash into Bitcoin. The decision to use Bitcoin as a strategic reserve asset was revolutionary at the time. For a publicly traded company accountable to shareholders and bound by strict reporting rules, this was unprecedented. Yet Strategy has consistently maintained and even accelerated this course, regardless of market volatility.

What is MicroStrategy and Why is it Now Called Strategy?

MicroStrategy was founded in 1989 by Michael Saylor and Sanju Bansal. In the 1990s, it became a pioneer in data-mining and analytics software. Large organizations used their tools to discover patterns in vast amounts of data. Over the years, the company‘s positioning changed radically. The recent name change to Strategy reflects this fundamental shift. The company no longer wants to be identified solely as a software provider. The new name emphasizes that the company‘s “strategy”—accumulating Bitcoin and deploying capital to increase that position—is now at the core of its corporate identity. While the software division remains profitable, the market now views the company as a Bitcoin development business.

Bitcoin as a Corporate Strategy: Why This Choice?

Strategy does not view Bitcoin as a short-term speculative investment but as a superior strategic asset. Michael Saylor has repeatedly explained that holding US dollars on the balance sheet for a company is like holding “melting ice.” According to him, cash loses a significant portion of its purchasing power annually due to inflation. Instead of traditional currency, Strategy chose Bitcoin for the following qualities:

• Scarcity: There will never be more than 21 million Bitcoins.
• Durability: It is a digital asset that cannot be corrupted or printed by governments.
• Portability: It can be transferred globally and instantly without banks.

This positions the company fundamentally differently from most enterprises, which hold reserves in cash, bonds, or short-term instruments.

How Much Bitcoin Does Strategy Own?

Strategy is known as the largest institutional holder of Bitcoin in the world. Over the years, the company has purchased Bitcoin on dozens of occasions. What stands out is their consistency: they buy during bull markets (rising prices) but buy even more aggressively during bear markets (falling prices). The exact number of Bitcoins they hold grows constantly through new purchases, often hundreds of millions of dollars at a time. This massive holding means Strategy now owns more Bitcoin than many large countries hold in their national reserves. This enormous reserve is the primary driver of the company‘s valuation in the stock market.

How Does Strategy Finance These Massive Bitcoin Purchases?

The scale of Strategy‘s Bitcoin acquisitions often raises questions among critics about where the money comes from. The company uses an ingenious mix of financial instruments that Michael Saylor often describes as “using cheap capital to buy the scarce asset of the future.”

Equity Issuance (At-the-Market offerings)

Strategy regularly issues new shares to raise capital from investors. While this dilutes ownership (more shares are added, reducing the percentage of existing shareholders), the company claims that the value of the additional Bitcoin purchased per share ultimately increases. Investors often accept this dilution because it provides regulated exposure to Bitcoin via a stock.

Debt Financing and Convertible Bonds

This is perhaps the boldest part of the strategy. Strategy borrows money at very low interest rates by issuing bonds. Sometimes these are “convertible” bonds, meaning the lender can later convert the debt into MicroStrategy shares. The company then uses the borrowed billions to buy Bitcoin directly. The bet is simple: as long as Bitcoin rises faster than the debt interest, the company generates huge profits for its shareholders.

The Role of Bitcoin on Strategy‘s Balance Sheet

Bitcoin is central on the company‘s balance sheet. Strategy follows a corporate-level “HODL” mentality; Bitcoins are held indefinitely and not traded. This has unique implications for financial reporting. Under current accounting rules, declines in Bitcoin‘s price often must be reported as a loss (“impairment”), even if the company does not sell. This creates massive fluctuations in quarterly reports, which can be hard for traditional analysts to digest. For Strategy, however, this is a paper reality secondary to the long-term vision of value storage.

MicroStrategy Stock Hits Record: The Bitcoin Leverage

The MicroStrategy (MSTR) stock has effectively become a proxy for Bitcoin. During bullish periods, the stock often rises much faster than Bitcoin itself. This is due to the debt financing mentioned above: because the company buys Bitcoin with borrowed money, the stock acts as leverage. For many investors, especially large pension funds and institutions that cannot or prefer not to buy Bitcoin directly on an exchange, MSTR is a perfect way to gain exposure to crypto market growth. During bull markets, this has led to astronomical gains and record highs, with the stock sometimes outperforming the largest tech companies in the world.

Michael Saylor‘s Vision: Bitcoin as Digital Property

Michael Saylor is the undisputed architect of this strategy. Since 2020, he has become one of the most influential voices in the crypto industry. His vision goes beyond investing; he sees Bitcoin as a technological breakthrough for humanity.

Superior Asset

Saylor often compares Bitcoin to prime real estate in a world city, but without maintenance, taxes, or physical borders. He calls it “Digital Gold, but better.” His philosophy is that every individual, company, and even country should hold a portion of their reserves in Bitcoin to survive economically in a world of monetary expansion.

Long-Term Vision

“I'm going to be buying the top forever” is a well-known quote from Saylor. He refuses to try timing the market. For him, any price for Bitcoin is cheap on a 10-20 year timeline. This steadfastness has earned him much respect in the crypto community, especially during deep crashes when he continued to buy unflinchingly.

Criticism and Risks: Where are the Dangers?

Strategy‘s approach is not without risk. Critics point to several fundamental risks that could threaten the company‘s future.

• Extreme dependence: If Bitcoin fails unexpectedly or becomes unusable due to regulations, the company loses almost all of its value.
• Debt load: If Bitcoin remains low for a prolonged period or falls sharply, Strategy still must pay interest and principal on its billions in loans, which could force Bitcoin sales, pushing the price further down.
• Volatility: Massive price swings make the stock unsuitable for cautious investors. The risk of a corporate-level margin call is often cited by skeptics.

Strategy Compared to Other Companies

While companies like Tesla, Block (formerly Square), and various Bitcoin miners also hold Bitcoin on their balance sheets, Strategy stands alone.

• Scale: Where Tesla invested about 10% of its cash in Bitcoin, Strategy completely restructured its capital to buy Bitcoin.
• Focus: For most companies, Bitcoin is a side activity or experiment. For Strategy, it has become the main reason for their existence.
• Leadership: No other CEO is as closely tied to the Bitcoin ethos as Michael Saylor.

The Future of Strategy: What to Expect

Strategy‘s future is inextricably linked to Bitcoin‘s success. The company is now more than a passive holder; it also develops software solutions on the Lightning Network (a second layer on top of Bitcoin) to make the network faster and more useful for businesses. Strategy acts as a pioneer. If their strategy succeeds long-term, more publicly traded companies are likely to follow their example. In this way, the company has played a historic role in the transition of Bitcoin from an internet phenomenon to a legitimate global reserve asset.

Frequently Asked Questions

Can MicroStrategy go bankrupt due to Bitcoin?

Although there is risk in the case of extreme and permanent Bitcoin price drops, the company structures its loans so that repayments are often due years later. This provides a long “runway” to weather periods of low prices.

Why buy Strategy stock instead of Bitcoin directly?

Some investors choose the stock because they can trade it within their existing brokerage account or because they want exposure to leverage (the stock often rises faster than Bitcoin). Additionally, the company provides a level of institutional infrastructure that some investors appreciate.

Who controls Strategy‘s Bitcoin?

The company uses professional custodians to store its Bitcoin securely. Strict security protocols are followed to ensure private keys for their billions in assets do not fall into the wrong hands. If you want to experience why companies like Strategy have such immense confidence in Bitcoin‘s future, at Coinmerce you can easily buy Bitcoin yourself with iDEAL. Step by step, you can build your own position and follow how this revolutionary technology is transforming the financial landscape forever.