Those companies that are heavily buying Bitcoin through MicroStrategy.

Rachel ，Golden Finance

In this round of the bull market, MicroStrategy has undoubtedly become the star company due to its疯狂 buying of Bitcoin.

The current behavior of MicroStrategy in purchasing Bitcoin can be simply summarized as: issuing convertible corporate bonds to raise funds from the public, and then using the raised funds to buy Bitcoin as company reserves. It is precisely because Bitcoin continues to rise that MicroStrategy's valuation increases and its stock price rises.

This strategy is a win-win for both the company and the bondholders who purchase convertible bonds. The company's valuation has achieved a spiral rise, and the bondholders either preserve their principal while earning interest, or enjoy the rise in stock prices after the bonds are converted into MicroStrategy's shares.

The risk has shifted to those investors who bought MicroStrategy stocks later. As long as Bitcoin continues to rise, this bond issuance and coin purchase strategy can keep being implemented. Since 2020, the MicroStrategy that purchased Bitcoin has seen its stock price multiply more than twenty times.

It was precisely seeing the huge profits behind MicroStrategy's bond issuance to buy Bitcoin that prompted some companies to follow suit. Most of these companies do not primarily operate in the blockchain space, but benefit from the purchase of Bitcoin, and their stock prices have risen along with the increase in Bitcoin's price.

MicroStrategy's Stock Price - An Amplifier for Bitcoin Prices

In 2020, MicroStrategy began acquiring Bitcoin, becoming the first publicly traded company in the United States to integrate Bitcoin as a reserve asset.

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

Initially, it adopted the method of purchasing with cash, and later shifted to raising funds by issuing and selling stocks as well as convertible bonds for purchases.

MicroStrategy currently holds more than 380,000 bitcoins, with the most recent purchase made at an average price of $97,862 per coin, totaling approximately $5.4 billion.

MicroStrategy was originally a smart software company, but after buying Bitcoin, its image in the eyes of the public has transformed into a "shadow company" of Bitcoin. From October 2000 to September 2020, MicroStrategy's stock price remained below $20 per share. However, as it continued to purchase Bitcoin, its stock price fluctuations began to detach from its core business, instead becoming a Bitcoin concept stock.

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Thanks to its active strategy of buying Bitcoin over the years, MicroStrategy's stock price has skyrocketed from $20 in 2020 to more than 20 times that today. The stock price of MicroStrategy has become an amplifier of Bitcoin's price, with its growth in recent years far exceeding that of Bitcoin.

Microstrategy Model Breakdown

In the early years, MicroStrategy directly purchased Bitcoin with cash, but now they issue convertible bonds to buy Bitcoin. The process and principles of MicroStrategy issuing bonds to buy Bitcoin and then selling stocks are as follows:

1. Issuance of Convertible Bonds: MicroStrategy chooses to privately issue convertible preferred notes to qualified institutional buyers to raise funds.

2. Attracting investors to purchase convertible bonds: Although MicroStrategy's convertible bonds have a low coupon rate and a high conversion price, they still attract certain investors for the following reasons:

a. Low risk: Even if not converted at maturity, investors can still recover their principal, unless MicroStrategy goes bankrupt.

b. Value of the option: Investors have the option for a period of six years, and it can be exercised to exchange shares once the MicroStrategy stock price rises above the agreed price, which is relatively low cost from the perspective of the options market.

3. Using funds to purchase Bitcoin: MicroStrategy will use the funds raised through the issuance of convertible bonds to purchase Bitcoin, continuously increasing its Bitcoin holdings.

4. Selling Stocks: When the price of Bitcoin falls, MicroStrategy may respond by selling stocks. On one hand, selling stocks can provide the company with additional funds to meet debt repayments or other financial needs to maintain the company's financial stability; on the other hand, by adjusting the ratio of stock and Bitcoin holdings, it balances asset allocation and reduces the risks brought about by Bitcoin price fluctuations.

V. Synergy and Impact of Overall Strategy:

a. Stock-Currency Relationship: The premium issuance of stocks to purchase Bitcoin drives up the price of Bitcoin, thereby increasing the company's net asset value and earnings per share, forming a positive cycle. Additionally, financing to buy coins accelerates profit growth, expands valuation multiples, causing the stock price to jump from linear growth to exponential leaps, with market capitalization and stock price rising more than the price increase of Bitcoin itself.

b. Stock-Bond Relationship: The market value of MicroStrategy has increased, driving it to enter more indices, leading to an increase in derivative trading and trading volume, which has lowered the financing costs of stocks and bonds. Its convertible bonds have a unique design, with the choice of converting to stock or cash repayment resting with MicroStrategy, thus avoiding the default issue that arises from the inability to repay convertible bonds upon maturity, essentially becoming a "debt-equity hybrid" tool that is friendly to stock prices and shareholders.

c. Currency-Debt Relationship: Debt is denominated in US dollars, and from a currency-based perspective, purchasing power approaches zero. The initiative for conversion conditions lies in micro-strategies, using this special "debt" to buy Bitcoin. In the long run, as long as the price of Bitcoin rises, the company has the opportunity to gain substantial profits, and the risks are manageable.

Learning MicroStrategy's Company

Just buying Bitcoin can increase stock prices by 20 times, countless companies are envious and have started to learn from MicroStrategy.

For these companies, the most immediate impact in the short term is that although the company's debt increases, they also receive a cash inflow, which helps alleviate the company's financial pressure. As Bitcoin rises, the value of the Bitcoin assets held by the company increases, and for publicly listed companies, their stocks will also become crypto concept stocks, climbing along with the rise of the crypto market.

Especially in the second half of this year, listed companies have started a Bitcoin buying spree. Here are some companies that have taken Bitcoin as an asset reserve:

Marathon Digital:

Like MicroStrategy, this company, regarded as the world's largest Bitcoin mining firm, also issued convertible bonds to purchase Bitcoin.

According to HODL15 Capital, as of November 15, 2024, Marathon Digital ranks first in the list of publicly listed Bitcoin mining companies by the amount of Bitcoin held, 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 the 2026 convertible bonds. The remaining funds will be used for Bitcoin acquisitions and general corporate purposes, including potential strategic acquisitions, asset expansion, and debt repayment.

The earliest purchase was in July 2024, when the company bought 2,282 bitcoins for $120 million, and then began to sell $250 million in private bonds to repurchase bitcoins.

Nilam Resources:

On March 25, 2024, Nilam Resources, a gold mining company based in South America, announced plans to acquire approximately 24,800 bitcoins valued at around $1.7 billion by issuing Series C preferred stock. The primary purpose of the transaction is to acquire a special purpose entity, MindWave, located in Mauritius, which holds a significant amount of digital assets, including bitcoins. These assets will be used as collateral for further investments by the company in high-yield projects. The acquisition is achieved through a Letter of Intent (LOI) signed between Nilam and Xyberdata Ltd., with plans to complete it through equity swap. Nilam believes this move will help it explore the digital asset market and expand its financing channels.

SOS Ltd.:

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

Previously, the company had been laying out its plans in the cryptocurrency mining sector for many years. As early as 2020, SOS announced it would spend approximately $20 million to procure 14,238 Bitcoin mining machines and 1,408 Ethereum mining machines; in 2023, SOS announced the launch of over 5,000 of its own mining machines at its hosting center in Texas and has signed a hosting agreement with Bitmain, with a total of 6,000 hosted mining machines, set to expire on August 20, 2025.

In order to maximize return on investment and minimize market volatility risk, the SOS plan employs various quantitative trading strategies including investment, trading, and arbitrage strategies to help the company achieve stable returns in the current market environment, while further optimizing the investment portfolio over time.

Metaplanet:

This is an investment company located in Japan, primarily focused on investments in high technology and innovation, particularly in areas such as artificial intelligence, blockchain technology, and fintech. It has already gone public. On November 28, 2024, it announced plans to raise up to 9.5 billion yen (approximately 62 million USD) through new share subscription rights to accelerate Bitcoin accumulation.

Earlier this month, it also announced the issuance of ordinary bonds (secured) with a total amount of 1.75 billion yen (approximately 11.3 million USD), an annual interest rate of 0.36%, and a term of one year. The proceeds will be used to purchase Bitcoin.

Since April 2024, it has been continuously accumulating Bitcoin, using Bitcoin as its strategic financial reserve asset. Because of this behavior, it has been dubbed "Asia's MicroStrategy." As it continues to purchase Bitcoin, its stock price, like MicroStrategy's, has been rising along with the price of Bitcoin.

Boyaa Interactive:

The company is a developer and operator in the board game industry, founded in 2004 and listed on the Hong Kong Stock Exchange in 2013. Since 2023, it has started purchasing cryptocurrencies, including Bitcoin, Ethereum, and USDT. On November 12, 2024, when the price of Bitcoin surpassed $90,000, Boyaa Interactive voluntarily disclosed its holdings: the company holds 2,641 Bitcoins and 15,445 Ether, with total costs of approximately $143 million and $42.5781 million, respectively, with an average cost of about $54,000 per coin and $2,756 per coin. The unrealized profit is nearly $100 million.

Tesla:

Since 2021, Tesla has been continuously purchasing Bitcoin, and of course, it will sell at the right time. According to Arkham data, Tesla's Bitcoin holdings amount to 11,509 coins.

SpaceX:

According to reports, the company led by Elon Musk also holds Bitcoin, but the specific amount has not been disclosed. It is estimated that SpaceX holds several thousand BTC in its corporate treasury.

Block.one:

The parent company of EOS has been reported to hold up to 140,000 Bitcoins, but the company's actual Bitcoin holdings and related investment details have not been fully disclosed transparently.

Block Inc.:

An American payment company, co-founded by Jack Dorsey, announced that starting in April 2024, Block will allocate 10% of its monthly gross profits from Bitcoin-related products to purchase Bitcoin. It started buying Bitcoin as early as October 2020, and according to data from the buybitcoinworldwide website, as of September 18, 2024, Block, Inc. holds 8,211 Bitcoins.

Nexon Co Ltd:

A South Korean company specializing in video game creation. It started purchasing Bitcoin in April 2021, reportedly spending around 100 million USD to acquire 1,717 Bitcoins.

Blueport Interactive:

Hong Kong-listed gaming company Languang Interactive has purchased cryptocurrency multiple times since 2023. Between June 30, 2023, and July 7, 2023, it acquired 19.3808 bitcoins, totaling approximately $590,000. Previously, from June 6 to June 15, it spent $650,000 to buy 24.8932 bitcoins. On September 13, 2024, during the preceding 12 months, the company purchased a total of 93.85 bitcoins at a cost of $2.7 million. In November 2024, Languang Interactive announced the launch of a $15 million Bitcoin network ecosystem investment management fund, BTC NEXT.

Blueport Interactive is actively laying out Web3, which is greatly influenced by its founder Wang Feng.

Ying Universe:

This is the parent company of the Yingke APP, which is listed on the Hong Kong stock exchange. In March 2024, it announced that its board of directors has approved a budget of 100 million dollars for the company to purchase cryptocurrencies on any regulated and licensed trading platform over the next five years.

Out of this one hundred million dollars, 60 million dollars will be used to purchase Bitcoin, approximately 20 million dollars will be used to purchase Ethereum, and about 10 million dollars each will be used to purchase USDT and US dollars.

National Wealth Innovation:

The financial company Guofu Innovation, listed on the Hong Kong Stock Exchange, announced in August 2024 that it had purchased a total of 36 million Hong Kong dollars worth of Bitcoin between March and August.