MicroStrategy has been renamed "Strategy", and Bitcoin holdings have almost doubled in Q4, and I want to do Bitcoin "smart leverage"

Author: Weilin, PANews

In the early morning of February 6, Beijing time, MicroStrategy held a 2024 fourth quarter earnings conference call and announced its brand restructuring plan. The company officially changed its name to "Strategy" and said it is "the world's first and largest Bitcoin fund." Management company.”

According to the Q4 financial report, the company's net loss was US$670.8 million, and operating expenses (including Bitcoin holding impairment losses) this quarter reached US$1.103 billion, a year-on-year increase of 693%.

Strategy's Bitcoin holdings have almost doubled in just three months. At the same time, Strategy has formulated KPI indicators, namely the annual "BTC Gain" and "BTC USD Gain" and set an annual "BTC USD Gain" target of $10 billion in 2025 . At the meeting, company founder and CEO Michael Saylor also revealed new strategies to attract "a large number of investors".

Q4 Financial Report: Bitcoin holdings almost doubled in three months

In the fourth quarter of 2024, Strategy's net loss was $670.8 million and a loss of $3.03 per share. By comparison, the company achieved a profit of $89.1 million and earnings of 50 cents per share in the same period last year. The losses were mainly caused by the impairment fees of $1.01 billion in Bitcoin holdings, a significant increase from the impairment of $39.2 million in the same period last year.

Operating expenses (including Bitcoin holding impairment losses) reached US$1.103 billion in the quarter, an increase of 693% year-on-year. As of December 31, 2024, the company's cash and cash equivalents were $38.1 million, down from $46.8 million in the same period last year.

While most investors will focus on Strategy's Bitcoin assets, Strategy also reports gains from its traditional software business. Total software revenue in the fourth quarter was approximately US$121 million, down 3% year-on-year. Total revenue for the whole year in 2024 was approximately US$464 million, a year-on-year decrease of 7%.

According to the financial report, the most striking thing is that its already huge Bitcoin holdings have almost doubled in just three months. As of January 24, Strategy currently holds 471,107 bitcoins, with a market value of approximately US$44 billion and a total cost of US$30.4 billion. The fourth quarter was the largest quarterly increase in the company's Bitcoin holdings, with a total purchase of 218,887 bitcoins, costing US$20.5 billion. Throughout 2024, the company purchased 258,320 bitcoins, with a total purchase cost of $22.1 billion and an average price of $85,447.

Strategy has added bitcoin to its balance sheet every quarter since August 2020, with more than 50 announcements issued. This time, the company reported that the yield on Bitcoin in 2024 is 74.3%, an indicator used to evaluate the strategic performance of investing in Bitcoin.

According to the conference documentation, “BTC Yield is a key performance indicator (KPI) that represents the percentage change in the ratio of the number of bitcoins held by a company to its assumed dilution of the number of shares outstanding over the cycle. ” Strategy has raised its annual BTC yield target for the next three years from the 6%-8% range to 15%. The company's BTC yielded 2.9% in the fourth quarter, compared with 5.1% in the third quarter.

Strategy has also announced another new key performance indicator (KPI), namely the annual "BTC Gain" and "BTC USD Earnings (BTC $Gain)" and set the annual "BTC $Gain" for 2025 USD earnings target is $10 billion.

Bitcoin Gain represents the amount of Bitcoin held by a company at an initial period multiplied by the Bitcoin Yield for that period. Bitcoin USD earnings (BTC $Gain) are the dollar value of Bitcoin earnings, calculated by multiplying Bitcoin earnings by the Bitcoin market price of the Coinbase Exchange at 4 p.m. ET on the last day of the applicable period.

Bitcoin’s “smart leverage”

To better reflect its Bitcoin strategy, MicroStrategy announced that the company is now operating under the Strategy brand. The announcement stated that Strategy is the world's first and largest Bitcoin reserve company, and the largest independent listed business intelligence company, and is one of the components of the Nasdaq 100 index. The new logo contains a stylized "B" letter, symbolizing the company's Bitcoin strategy and its unique position as a Bitcoin fund management company. The main color of the brand has now been changed to orange, representing energy, wisdom and Bitcoin.

In its third-quarter earnings report released in October last year, Strategy announced its "21/21 Plan" with the goal of raising $42 billion in funds over the next three years, of which $21 billion comes from equity financing and another $21 billion comes from fixed income Issuance of securities.

Strategy's capital raising and Bitcoin purchase speeds accelerated significantly in the fourth quarter of 2024, with the company raising $15 billion through equity issuance and $3 billion through convertible bonds in less than two months.

“We have completed $20 billion of our $42 billion capital plan, far exceeding our initial timetable while leading the digital transformation of capital in financial markets,” CEO Phong Le said in the announcement. “Looking forward to the rest of 2025, we have the good conditions to further enhance shareholder value by leveraging strong support from institutional and retail investors for our strategic plan.”

In addition, at the financial report meeting, company founder Michael Saylor pointed out that there is a 45% volatility gap between Bitcoin and the traditional market, and revealed a new strategy to attract "a large number of investors".

“We design our business to maintain volatility,” Saylor said, comparing Strategy’s approach to traditional corporate funding operations that typically minimize volatility.

Traditional assets (such as the SPDR S&P 500 ETF and the Invesco QQQ Trust, whose volatility levels are between 15-20) and Bitcoin (volatility levels are between 50-60), which creates a gap area of ​​about 45%. Strategy's common stock targets even higher than Bitcoin itself, aiming to reach 80-90 volatility levels while maintaining what Saylor calls "smart leverage" through a combination of equity issuance and convertible bonds.

“There are a lot of investors who want to have this volatility. They may not want to have the extreme leverage of MicroStrategy, and may not even want the original and unmodified volatility of IBIT or BTC, but Strike (Strategy’s permanent preferred stock STRK) What attracts is a new group with different returns and volatility characteristics.”

Saylor refers to Strike preferred stock, which provides an 8% dividend yield and has Bitcoin exposure. On January 27, according to official news, MicroStrategy announced that it intends to issue 2,500,000 shares of MicroStrategy Series A free-exercise preferred shares in accordance with market and other conditions. MicroStrategy intends to use the net proceeds from the offering for general corporate purposes, including the purchase of Bitcoin and as working capital.

The stocks were subsequently sold at $80 per share, 20% lower than the market price, effectively pushing buyer's yield to 10%

At present, with Strategy's rebranding and its significant growth in Bitcoin holdings, the company has demonstrated its ambitions as one of the world's largest Bitcoin reserve companies. In the future, whether Strategy can continue to realize the returns of investing in Bitcoin while flexibly making strategic layouts will be the key to its success.