MicroStrategy and Bitcoin Investment: A New Paradigm
MicroStrategy's Investment Strategy
1. Large Holdings of Bitcoin
MicroStrategy is not just a software company.
This company buys Bitcoin in large quantities and pursues a leveraged strategy using it.
- Current Bitcoin Holdings: Approximately $42 billion (approximately ₩63 trillion)
- Bitcoin Purchase Cost: Approximately $24 billion (approximately ₩36 trillion)
- If the price of Bitcoin rises, the company's value also surges.
2. Unique Valuation Method
Traditional stock valuation methods utilize PER (Price-to-Earnings Ratio), PBR (Price-to-Book Ratio), etc., but MicroStrategy applies a new calculation method.
- M-NAV (Market Net Asset Value):
- The value obtained by dividing the company's total market capitalization by the total value of the Bitcoin it holds.
- Reasons for being valued higher than the value of Bitcoin holdings.
Currently, MicroStrategy's market capitalization is approximately $82 billion, receiving almost double the premium over the value of its Bitcoin holdings.
3. Leverage Strategy
MicroStrategy applies a method of securing capital using low borrowing costs and using that capital to purchase additional Bitcoin.
- High PER (currently around 890x) → Low borrowing cost (around 0.1%)
- Additional Bitcoin purchases with funds raised at low interest rates.
- If the price of Bitcoin rises, the company's stock price also rises.
If this system is maintained, the company's value can theoretically continue to increase.
Risks and Considerations
1. Volatility of Bitcoin
Bitcoin is more volatile than traditional assets. If Bitcoin plummets, MicroStrategy could suffer significant losses.
- Bitcoin price drop → Decrease in the value of assets held → M-NAV drop → Credit rating deterioration
- If the company cannot purchase additional Bitcoin, the premium may disappear.
2. Limitations of Accounting Treatment
The market price of Bitcoin currently held by companies is not fully reflected in performance reports.
- When the price of Bitcoin rises, it is not reflected as profit in the company.
- However, when it falls, it is reflected as a loss → Structurally disadvantageous in accounting.
This can make it difficult for investors to assess the accurate value of the company.
3. Regulatory Risk
Although there is a movement to revise the system in Korea to allow companies to hold Bitcoin, changes in regulations in each country may affect MicroStrategy's strategy.
Conclusion: Reasons Why MicroStrategy Investment Requires Consideration
MicroStrategy is a company that employs a smart leverage strategy using Bitcoin.
When the price of Bitcoin rises, the company's value can increase significantly, and additional profits can be expected by utilizing low borrowing costs.
However,
- High volatility of Bitcoin
- Limitations of accounting treatment
- Regulatory risk
These factors require a cautious approach to investment decisions.
If you are positive about Bitcoin, MicroStrategy may be an interesting investment opportunity, but it must be considered that it also entails greater risks.
MicroStrategy is a company that holds a large amount of Bitcoin and employs a leveraged investment strategy using it.
- Currently holds $42 billion worth of Bitcoin, and its market capitalization is valued at approximately $82 billion.
- Evaluated differently from traditional valuation methods by utilizing the concept of M-NAV (Market Net Asset Value).
- A strategy to increase value by purchasing additional Bitcoin using low borrowing costs (around 0.1%).
However,
- Volatility of Bitcoin
- Limitations of accounting treatment
- Regulatory risk in each country
These points should be considered, and a cautious approach is required when investing.
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