Before answering the questions raised in the title, it is necessary to clarify that Michael Saylor, CEO of Strategy (formerly MicroStrategy), began with Bitcoin Purchase (BTC) in August 2020.
As Saylor himself said, at the time, the company was against the string because it had a $500 million cash treasure that didn’t generate yields, along with the pandemic context per Covid-19 and the threat of increased inflation. There were only two options in the table. It involves finding something that generates yields through stock repurchase, or returning the money to shareholders.
Choosing the second option meant staying offside as they lost competitiveness and saw how employees were leaving and ultimately endangering business continuity. After studying various alternatives, Saylor convinces the board of directors of that The best exit was using Bitcoin. The initial purchase was made for $250 million, with half of the available cash.
Almost five years later, what began as a plan to protect against inflation was the creation of one of the current trends in financial markets: the BTC Strategic Preparation. Therefore, the strategy became the largest company in the Treasury cited in the stock market with Bitcoin.
When this memo was published, The company has accumulated a total of 592,100 BTC.
And most interesting is how Saylor demonstrated his global strategy for winning BTC. As a sale of stocks and issuance of debts, without relying on management income.
In fact, as reported by Cryptonoths, the majority of BTC purchases were funded accurately through issuance of debt obligations with a long term expiration period with interest rates of 0%. What’s interesting here is that investors participating in the purchase do not receive recurring payments, but that the action of the issuer will benefit regardless of whether the strategy in this case goes up. They then turn those bonds into action at a higher price.
In other words, the advantage of the buyer lies in the possibility of reassessing these actions. The funds obtained are intended to acquire more units of the currency created by Nakamoto Atoshi.
The company implements an investment strategy known as the “average cost of dollars” (Dollar Cost Average O DCAfor English acronyms). This consists of regular purchases of assets with potential bullishness, with the average averages the price of the entrance over time rather than trying to earn the lowest points on the market.
Plan 21/21
On October 30th, 2024, Saylor announced Plan 21/21 launches initiative to raise $420 million Through a combination of capital and debt financing between 2025 and 2027.
Of that total, we get $220 million from the issuance of general and preferential shares, including sales under the ATM mechanism (In the market oSold at open markets, Spanish). This allows the company to place stocks directly into the open market, depending on the conditions at the time. This eliminates the need for companies to set prices in advance or make traditional public offerings.
Other $2.1 billion will be earned, including bonds, convertible memos, preferred stocks, and bonds.
Three Head Monsters
Within the framework of Plan 21/21, the strategy chose to use the issuing program with three priority actions: STRK, STRF, and Stride (STRD). As reported by Cryptonotics, the priority action STRD will provide a non-cumulative fixed dividend of 10% per year ($10 per share, nominal value of $100) as of September 30, 2025, subject to the approval of it by the board.
Unlike STRK stocks (8% cumulative, convertible) and STRF (10% cumulative with penalties), STRD dividends will not accumulate if not declared.
Adam Livingston, author of the book “The Bitcoin era”“, “The three-headed preferred capital monster harvesting starving capital defines this stock’s trident that displays the toughest assets that humanity knows.” adds: “Each emission is a liquid siphon, each section is a Troy horse, and each coupon on the check sent to investors is simply distracting while your money is quietly converted to refrigerated to Satosh.”
He also believes that Because “the market loves it” and “they receive the yield”“What they really fund is structurally reflective demand that doesn’t sell, they don’t sleep, and they don’t stop buying BTC until they get a marginal price.”
For this reason, Livingston compares its strategy with the central bank. This is to issue measures or obligations to purchase BTC, increase holdings and reduce offers available in the market. The outcome of this strategy is sustained bullish pressure on Bitcoin prices in the medium and long term.
This is because BTC has a limited supply of 21 million units, and its broadcasts were cut every four years by Harving. To that end, you need to add coins that the strategy has acquired and not in circulation, as it is to hold it for the long term. According to Michael Saylor BTC prices could reach $13 million 2045.
Risks of this model
BTC’s accumulation strategy has not only been praised but also criticized. As reported by Cryptonotics, financial analyst Jacob King compares this model with a cycle of iterations. Similar to the logic of the Ponzi scheme.
To support analysis, King uses graphs that show how the model is based on sequences that are continuous feedback.
As you can see in the previous image, it all begins when the company issues debt or action to get the funds Bitcoin will buy. The purchase reduces available offers, pushes upward prices, and increases the company’s market capitalization.
King points out that this increased capitalization can attract new investors (unspecialized) and repeat cycles with new emissions. So far, the entire gear is working. But what happens when BTC prices fall? In that scenario, The model becomes unsustainablewhich can have devastating consequences for investors.
If the balance is strongly exposed to BTC, the strategy can face significant risks if the asset’s price falls below a certain threshold (estimated at $19,000). In this case, the company may be forced to sell a portion of its holdings to cover its financial obligations.
If this occurs, it breaks the narrative that the strategy is not separated from his holdings, which affects market confidence. This scenario is unlikely (but not impossible), but such a magnitude drop would have a devastating effect on the price of Bitcoin.