Bitcoin‑backed balance sheet
Deep crypto reserves create net asset floor and institutional appeal
MicroStrategy: A business‑intelligence firm turned Bitcoin treasury vehicle: Recently raised £2bn to buy more Bitcoin
MicroStrategy (rebranded to Strategy in early 2025) originally built its reputation selling business-intelligence and mobile-software solutions. Since 2020, the company shifted direction: it’s now among the world’s largest corporate Bitcoin holders.
Updated: Jul 29, 2025
Technology
mediumusa
Bull & Bear Case
An overview of the main reasons to invest and the key risks involved.
Bull Case
Innovative financing engine
Preferred stock offers non-dilutive capital for continued BTC accumulation.
Community and momentum
Strong retail and ETF demand drive premium valuation versus NAV.
Bear Case
Accounting & tax exposure
New mark-to-market rules may create large, recurring paper tax bills.
Operational sustainability
Software business is loss-making, cannot support dividend obligations alone.
Legal and regulatory scrutiny
Ongoing lawsuits allege misleading crypto disclosures and corporate governance failures.
Investment Thesis
Overview of buy and sell case of the business.
Why Invest?
Key pieces of information about the business that you need to know about.
Bitcoin‑backed balance sheet
MicroStrategy has transformed into a de facto Bitcoin holding company. With over 607,000 BTC as of July 2025, worth around $72 billion, it has more Bitcoin than any other public company by far. These assets offer investors pure exposure to Bitcoin with added leverage via debt and preferred equity. This structure has made MicroStrategy attractive to those seeking a liquid, regulated, stock‑market proxy for long-term Bitcoin ownership. As institutional interest in digital assets grows, this asset-heavy model may benefit from valuation uplift beyond Bitcoin’s own performance.
Innovative financing engine
MicroStrategy’s growth is fueled by one of the most aggressive capital-raising strategies in corporate America. The company has issued multiple series of preferred shares, each with tailored coupon and conversion features, as well as convertible bonds and equity sales. These instruments have allowed it to acquire more Bitcoin without needing positive free cash flow from its legacy operations. This financing strategy adds financial risk but has also enabled significant accretion when Bitcoin rallies, creating a capital structure that amplifies upside for shareholders.
Community and momentum-driven uplift
MicroStrategy has a uniquely loyal investor base, especially among Bitcoin maximalists and retail traders. The company’s social media presence and its chairman, Michael Saylor, a public person, help fuel this “cult stock” status. It has also been added to major indices like the Nasdaq-100, drawing attention and inflows from ETFs and quant funds. This blend of narrative momentum and passive inclusion can drive persistent valuation premiums versus NAV. In a world increasingly driven by story and sentiment, that matters.
Catalysts
The key events that could drive investment opportunities and shift markets.
The launch of STRC, MicroStrategy’s new preferred share class, has raised around $2 billion. Once the funds arrive, the company is expected to use them to buy more Bitcoin.
New BTC purchase disclosures (e.g. July 2025 added 6,220 BTC) reaffirm the company’s accumulation approach and public narrative
Potential federal guidance or tax policy around crypto treasury firms could clarify cost structure and net exposure
Nasdaq‑100 inclusion sustained and broader ETF flows supporting trading liquidity and premium multiple
Bitcoin price appreciation, through halving cycles or institutional adoption, magnifies NAV leverage
Structural tax reforms or capital market innovations may allow MicroStrategy to monetise Bitcoin via new instruments
Key Risks
Key pieces of information about the business risks that you need to know about.
Accounting & tax exposure
New FASB guidance (ASU 2023‑08) requires marking Bitcoin to fair value, potentially triggering billions in taxable income under the US alternative minimum tax starting in 2026, despite no cash gains realised. This might erode returns and impose large future tax obligations.
Operational sustainability
While BTC continues to dominate the balance sheet, MicroStrategy’s core software business remains loss-making (e.g. Q1 2025 net loss of ~$4.2 billion) and generates minimal free cash flow, raising concerns over the ability to fund preferred dividends and interest from operations alone.
Legal and regulatory scrutiny
Regulatory and litigation risks are rising. Investors have sued over withholding crypto-related risks in disclosures, and class actions are ongoing alleging misleading statements about profitability and treasury strategy.