MicroStrategy, one of the most significant players in corporate Bitcoin ($BTC) investment, recently announced its Q3 2024 results.
The report highlighted the company’s deep commitment to Bitcoin as a core strategy for growth.
By combining its Bitcoin investments with a robust software business, MicroStrategy aims to boost shareholder value and stand out as a leader in the digital asset space.
MicroStrategy’s confidence in Bitcoin began back in 2020 when it made headlines as one of the first major companies to use Bitcoin as a primary treasury asset.
In Q3 2024, the company expanded its holdings again, adding 25,889 $BTC, which brings its total holdings to 252,220 $BTC, worth an estimated $18 billion today.
This most recent addition was purchased at an average price of $60,839 per $BTC, indicating the company’s long-term belief in Bitcoin.
With an average purchase price of $39,266 per $BTC across its holdings, MicroStrategy’s Bitcoin investments are currently profitable. This shows that the company’s timing has been advantageous, as Bitcoin’s market price has risen since its initial purchases.
MicroStrategy also manages its finances with a mix of debt and equity funding, including $4.3 billion in convertible debt and an additional $1.1 billion raised through new shares.
This approach allows the company to fund Bitcoin purchases without relying solely on its cash reserves, which currently total $836 million.
Beyond Bitcoin, MicroStrategy’s software business has also shown growth. In Q3, subscription billings increased by 93% year-over-year, reaching $32.4 million.
This revenue growth demonstrates that the company’s business model, which combines a solid software base with substantial Bitcoin holdings, may offer a viable path for other corporations considering digital assets.
The 21/21 plan
Looking forward, MicroStrategy recently introduced the “21/21 Plan”, an ambitious goal to raise $42 billion over the next three years, specifically to buy more Bitcoin. CEO Phong Le explained the company’s objectives, stating,
“As a Bitcoin Treasury Company, we plan to use the additional capital to buy more Bitcoin as a treasury reserve asset in a manner that will allow us to achieve higher BTC Yield.”
The 21/21 Plan aims to raise half of this amount, $21 billion, from equity and the other half through debt. With these funds, the company expects to add a substantial number of new $BTC to its reserves, possibly as much as 580,000 $BTC, which would equal about 2.7% of Bitcoin’s total supply.
This move could have a significant impact on the Bitcoin market by reducing available supply, thus potentially driving up demand and price.
If the company follows through on this plan, it could buy up nearly all new Bitcoin mined over the next few years. Currently, only about 450 Bitcoin are mined each day, and the next Bitcoin “halving”, an event that reduces mining rewards by half, is expected in March 2028.
This purchase strategy could place steady daily buy pressure on the market, worth around $40 million over three years, giving MicroStrategy an even stronger influence on Bitcoin’s price dynamics.
Stock gains and market impact
MicroStrategy’s bold strategy has not only grown its Bitcoin holdings but also boosted its stock price significantly.
Recently, the company’s stock value surpassed even that of tech giant Microsoft, rising over 1,500% since 1999, compared to Microsoft’s 1,460% increase over the same period.
On 25 October, MicroStrategy’s stock hit a high of $236 per share, continuing a six-week rally and setting a 25-year record for the company.
The crypto community has taken note of MicroStrategy’s recent success. Crypto Coin Coach remarked, “MicroStrategy is soaring to a new all-time high… crushing every company without Bitcoin on their balance sheet”.
Since shifting its focus in 2020 from software revenue to Bitcoin accumulation, MicroStrategy has consistently increased its $BTC holdings, a strategy that has been reflected in its growing stock value.
MicroStrategy’s market capitalisation now stands close to $43.35 billion, placing it among the top 500 companies globally. The firm is approaching a $50 billion market cap, a major milestone that could further validate its Bitcoin-centred strategy.
Additionally, the company’s trading volumes have surged, often rivalling those of tech giants like Nvidia. On 11 October, MicroStrategy’s trading volume reached 30 million shares, which equalled 17.65% of Nvidia’s 170 million share volume that day.
MicroStrategy’s performance has also been closely tied to Bitcoin’s recent price increases, with the company’s net asset value (NAV) premium now at its highest level since early 2021.
This trend shows investor confidence in the company’s commitment to Bitcoin and its potential to shape future corporate strategies.
