The Frontier of Bitcoin Investment: Strategy Company's Innovative Financing and Market Impact

Introduction

A software company originally focused on business intelligence solutions began heavily investing in Bitcoin starting in 2020, gradually becoming the focus of the US stock market. The company raised funds by issuing stocks and convertible bonds to purchase Bitcoin, and as of February 21, 2025, it has accumulated nearly 500,000 Bitcoins, valued at over $40 billion.

This company essentially transforms the stock market into a Bitcoin ATM through a carefully designed capital structure. They raise funds by issuing new shares and convertible bonds to increase their Bitcoin holdings, and then support the stock price valuation with their Bitcoin positions, forming a capital closed loop deeply tied to crypto assets. With the unique high-premium financing mechanism of the U.S. stock market, the company not only stands out among Bitcoin concept stocks but has also developed a set of "alchemy" recognized by the U.S. stock market through equity issuance and coin price manipulation.

The Logic Behind Stock Price Fluctuations

The reasons behind the significant fluctuations in the company's stock price, as well as how they attracted a large number of speculators through Bitcoin investments, can be summarized as follows:

1. The non-linear relationship between stock prices and Bitcoin: Many people believe that the company's stock price should rise and fall in sync with Bitcoin, but this is not the case. For example, in November and December of last year, when Bitcoin was still rising, the company's stock price had already begun to decline.

2. The impact of narrowing premiums: The company's premium is gradually shrinking compared to before. The focus of the company's executives is not on the value of the stock itself, but on its volatility. They package the company's stock as a high-volatility speculative tool, particularly attracting institutional investors who cannot directly purchase Bitcoin ETFs.

3. Bitcoin's "alternative investment": Many institutions are unable to directly purchase Bitcoin or Bitcoin ETFs due to regulatory restrictions or internal policies, especially in countries like South Korea and Germany. Therefore, the company has become an alternative option for these institutions to invest in Bitcoin.

4. Marketing strategies of company executives: Company executives not only promote the company's stock but also emphasize its leverage effect. They state that if one is optimistic about the rise of Bitcoin, then the increase in the company's stock will be even greater, and it is safer than buying options with leverage, as there is no need to worry about liquidation issues.

5. Uniqueness of the Company: The company's success largely depends on its strong financing ability, constantly raising funds to purchase more Bitcoin. At the same time, the company's executives are skilled at marketing, promoting through various channels and packaging the company as a "super leverage tool," attracting speculators from around the world.

The Cryptocurrency Vision of the Company Founder

The founder of the company has had a profound impact on the promotion of Bitcoin throughout the industry. By frequently appearing in public, giving interviews, and delivering speeches, he has not only brought Bitcoin out of its niche but also attracted a large number of institutional investors into the market. Currently, the company and ETFs are the two main buyers in the Bitcoin market, with the company's operations being more notable as they insist on a strategy of only buying and not selling.

The founder's marketing strategy is impressive; he has stated that he has made a will to destroy the Bitcoin private keys he personally holds after his death, completely removing these Bitcoins from circulation. This "cult leader-level" operation seems to showcase his eternal contribution to the Bitcoin industry. Although no one knows whether he will fulfill his promise in the future, this statement has somewhat stimulated the market.

It is worth noting that the Bitcoin held by the company is actually managed by a trusted third-party custody institution, in compliance with the audit and regulatory requirements for listed companies. Therefore, those who are concerned about the handling of Bitcoin after the personal demise of the founder can rest assured.

The founder is not only an active advocate of Bitcoin but is even more aggressive in some aspects than some early investors. Before the emergence of ETFs, he had shaped the company into an existence similar to a Bitcoin ETF. Market rumors suggest that a well-known entrepreneur decided to have his company purchase Bitcoin largely influenced by the founder's advice.

Recently, the founder's remarks indicated his support for the development of the entire digital economy, suggesting that the United States should become a global leader in the digital economy and promote the on-chain and tokenization of all assets. He is no longer limited to Bitcoin but has recognized the potential of blockchain technology in a wide range of fields. This open attitude has also earned him more recognition in the blockchain industry.

In terms of the future digital economy layout in the United States, the founder even proposed the idea of incorporating Bitcoin into the national strategic reserves to further expand the United States' leadership position in the global digital economy. He not only promotes Bitcoin but also presents a vision for a global on-chain economy, which shows us that the future global economy may head towards a more decentralized financial structure, and there may even emerge a network financial system that transcends sovereign nations.

However, in this future landscape, capital flow and regulation will face new challenges. Especially if the United States dominates this on-chain economy, other countries or organizations around the world will face greater pressure of capital outflow. Even if regulatory authorities in various countries attempt to control capital flows through traditional means, these methods may become ineffective in the face of a decentralized on-chain economy.

Company's Asset Game Strategy

The current price of Bitcoin has dropped to around $87,000 from its high, while the company's cost basis is about $66,000. This raises a question: what will happen in the market if the price of Bitcoin falls below the company's purchase cost?

During the last bear market, the company's situation was even worse, with net assets showing negative values. Although this situation is extremely rare for any company, at that time the company was not forced to liquidate or sell Bitcoin, mainly because their debt maturity dates were far off, and no one could force them to liquidate immediately.

Interestingly, the company's founders hold nearly 48% of the voting rights, which makes it very difficult to initiate any proposals for liquidation. Even in situations where the company's financial condition is tight, creditors and shareholders find it hard to easily put forward liquidation requests.

So, if Bitcoin really falls below the average cost of holding, will the company's stock fall into the so-called "death spiral"? In fact, this question was raised during the last bear market. At that time, the company's net assets were negative, and the market was in severe panic, but the current market should be more experienced, as investors have gone through these fluctuations and won't panic like back then.

In addition, the company's management actually has some flexible coping strategies. They can choose to issue bonds, increase stock issuance, or even use the Bitcoin they hold as collateral to borrow money. Currently, the company owns about $40 billion worth of Bitcoin, which means they can use these Bitcoins as collateral to obtain funds. Even if the price drops, they can avoid being forced to sell by adding more collateral.

Moreover, the company's main debt does not mature until 2028 at the earliest, and no one can force them to make unfavorable decisions before that. In the short term, even if Bitcoin prices fluctuate, the company will not face immense financial pressure immediately, nor is it likely to be forced to sell Bitcoin.

An increasing number of sovereign funds and institutions around the world are beginning to view Bitcoin as a reserve asset, which is a significant trend. Against this backdrop, the long-term prospects for Bitcoin remain optimistic. Market rumors suggest that certain countries have started purchasing large amounts of Bitcoin ETFs, indicating that more countries and institutions will enter the Bitcoin market in the future. Although Bitcoin's price may still fluctuate in the short term, the company's strategy seems to align with the overall market trend in the long run.

Questions Worth Considering

1. Can the volatility of the Bitcoin market maintain its current level?

The company essentially offers high-leverage investment tools through the high volatility of Bitcoin. But if Bitcoin is gradually accepted by institutional investors and volatility decreases, can the company maintain its existing high-return strategy? With the introduction of Bitcoin ETFs, the long-term cyclical nature of Bitcoin prices has been disrupted, and the spot price of Bitcoin has become more stable due to decentralized financial derivatives like ETFs. The price trend of gold after ETFs provides us with a reference; the previous high volatility of Bitcoin may no longer exist, with the overall change shifting from aggressive to moderate.

2. How long can the company's financing methods last?

Currently, this model of financing to buy coins is based on the market's long-term bullish outlook on Bitcoin. But if the price of Bitcoin enters a long-term fluctuation or even a declining range in the future, can the company's financial situation withstand it? If it continues to raise funds by issuing bonds and increasing stock to buy Bitcoin, the market's premium on its stock will further shrink. The company's financing methods are highly dependent on market optimism. Once the price of Bitcoin enters a long-term fluctuation or declining range, in terms of financial pressure, existing debts need to pay interest, and the company also has to deal with the dilution of shareholder equity due to the increase in stock. A specific policy environment may also affect the company's financing model; if these favorable factors gradually fade, the company's financing conditions may not be as good as before.

3. Are the company's founders idealists who support Bitcoin or arbitrageurs of Bitcoin?

The role of the founder is essentially a combination of an idealist and an arbitrageur, deeply understanding and recognizing the long-term potential of Bitcoin, while also being very adept at utilizing market mechanisms to profit for the company and individuals. By taking advantage of Bitcoin's high volatility, they promote the company's stock as a "leveraged Bitcoin investment tool." This practice attracts institutional investors who cannot directly invest in Bitcoin or Bitcoin ETFs, allowing them to gain indirect exposure to Bitcoin by purchasing the company's stock. Rather than being a staunch believer in Bitcoin, the founder is more of an arbitrageur of the volatility opportunities in the Bitcoin market. The series of operations by the company is essentially about profiting from the "fluctuating market" returns of the stock market by leveraging Bitcoin, ultimately leading the company to rely more on market sentiment and the price performance of Bitcoin, rather than the long-term value of Bitcoin itself.

Conclusion

The company's capital operation model is timely, but is its stock worth investing in? From a personal perspective, for those in the crypto industry, the company's stock has better odds than participating directly in Bitcoin, and it overall resembles an accelerated version of Bitcoin.

The company appears to be a software company focused on commercial data analysis, but in reality, its operating model has completely shifted to the accumulation of Bitcoin assets. The company's stock has a leverage effect because it holds a large amount of Bitcoin and may increase its holdings through borrowing or issuing bonds, which amplifies the sensitivity of its stock price to Bitcoin price fluctuations. When Bitcoin rises, the company's stock price may increase even more, and vice versa.

The company's stock has skyrocketed from $68 at the beginning of the year to around $400 now, with an increase that even surpasses many well-known companies. Some believe this is due to the founder successfully driving up the stock price through a "infinite funding external tool" operating model; others criticize it as being similar to a Ponzi scheme and worry that it could trigger the next collapse in the cryptocurrency market.

Currently, the company's Bitcoin investment returns greatly exceed its traditional business income. Although the software business revenue has not grown significantly in the past few years and has even declined, the company has raised funds to purchase more Bitcoin by continuously issuing bonds and diluting equity, resulting in an overall profit increase. The company has deeply bound its stock to Bitcoin, which has its pros and cons, as the core business cannot generate significant profits, putting all prospects on the rise of Bitcoin prices. It is still unclear whether the future direction of Bitcoin prices will achieve steady growth through more financial derivatives, ETFs, and strategic reserves, or if it will face a wave of "big liquidation."

The company has further enhanced its financing capability by issuing interest-free convertible notes. These notes allow investors to convert them into company equity in the future, but the conversion price is well above the current stock price. At first glance