The Saylor's Microstrategy Playbook

Building a Bitcoin Treasury Empire

December 27, 2024

TL;DR

  • MicroStrategy is the largest holder of Bitcoin, with 444,262, worth ~$42B

  • The company uses near-zero interest convertible bonds to fund Bitcoin purchases

  • The strategy combines financial engineering with Bitcoin's growth potential

In a bold move reshaping corporate treasury management, MicroStrategy has accumulated Bitcoin worth $42 billion through innovative financing, becoming the largest institutional Bitcoin holder. This represents a staggering 2.16% of Bitcoin's total supply as of December 2024.

The Zero-Interest Bitcoin Machine
At the heart of MicroStrategy's strategy lies a brilliant financial engineering feat. The company issues convertible bonds with interest rates between 0% and 2.25%, attracting investors who bet on both Bitcoin's potential and MicroStrategy's stock performance. These bonds can later be converted to company shares if the stock price rises, creating a win-win scenario for both parties.

The strategy's elegance lies in its simplicity: borrow cheap, buy Bitcoin, and let appreciation do the work. As more Bitcoin backs each share, the company's value potentially increases, creating a self-reinforcing cycle. This approach has transformed MicroStrategy from a business intelligence company into a Bitcoin-powered financial powerhouse.

However, this isn't a one-size-fits-all solution. Smaller companies face significant barriers: limited access to capital markets, higher borrowing costs, and increased regulatory scrutiny. While the strategy has worked remarkably for MicroStrategy, it requires careful consideration of risk tolerance, regulatory compliance, and long-term sustainability before others attempt to replicate it.

Tatiana Kofman ran the numbers on her blog Myth Of Money and presented as such:

“Data highlights the rapid adoption of Bitcoin by businesses:

  • As of August 2024, companies collectively held 683,332 BTC—3.3% of Bitcoin’s total supply—a 587% increase since 2020.

  • U.S.-based firms dominate, holding nearly half of these reserves, worth approximately $19.7 billion.

  • The number of publicly traded companies with Bitcoin holdings grew by 40% in the past year, showing increasing mainstream acceptance.

  • Institutional interest is also surging. Spot Bitcoin ETFs attracted over $6 billion in inflows this month, with BlackRock’s iShares Bitcoin Trust leading the way, managing 471,329 BTC”

Saylor’s Microstrategy play has encouraged other market participants to enter the arena with novel offerings to capture the upside and bright future of this new asset class, Vivek Ramaswamy’s Strive and Bitwise’s new offerings are just an example of what’s yet to come:

Disclaimer: This content is for information and education purposes only and it is not intended to serve as investment, financial, tax or legal advice. Do your own research before investing.