MicroStrategy Doubles Down on Bitcoin: Plans to Spend $42 Billion on Purchases Over Next Three Years

MicroStrategy Doubles Down on Bitcoin: Plans to Spend $42 Billion on Purchases Over Next Three YearsMicroStrategy, a publicly traded business intelligence software provider, has garnered significant attention for its "unconventional" Bitcoin investment strategy. The company has deeply intertwined its fate with Bitcoin and continues to increase its investment in the digital asset

MicroStrategy Doubles Down on Bitcoin: Plans to Spend $42 Billion on Purchases Over Next Three Years

MicroStrategy, a publicly traded business intelligence software provider, has garnered significant attention for its "unconventional" Bitcoin investment strategy. The company has deeply intertwined its fate with Bitcoin and continues to increase its investment in the digital asset. On Wednesday, MicroStrategy released its third-quarter earnings and unveiled an ambitious plan: raising $42 billion in the next three years to buy more Bitcoin.

Dubbed the "21/21 Plan," the financing scheme involves raising $21 billion through equity financing and $21 billion through debt issuance over the next three years. Phong Le, the company's president and CEO, explained that the move aims to further boost the company's returns on its Bitcoin holdings.

"As a Bitcoin financial company, we plan to leverage additional capital to purchase more Bitcoin, holding it as a treasury asset, to achieve higher Bitcoin returns," Le said in the company's third-quarter earnings press release.

MicroStrategy's last reported Bitcoin purchase took place in mid-September when it acquired 7,420 Bitcoin for $458.2 million. Currently, the company holds 252,220 Bitcoin, valued at approximately $9.9 billion. The average purchase price for these holdings stands at $39,266. Based on the current price of Bitcoin, approximately $72,000, the company's Bitcoin holdings are worth over $18 billion.

MicroStrategy also raised its "Bitcoin return rate" target range from the previous 4%-8% to 6%-10%. This metric, a key performance indicator (KPI) established by founder Michael Saylor and his team, achieved a 17.8% figure in the third quarter.

Founded in 1989, MicroStrategy's operations encompass enterprise software and cloud-based services, but its worth is now almost entirely tied to Bitcoin ownership. MicroStrategy is the largest publicly traded company holding Bitcoin globally, surpassing other Bitcoin-investing companies like Tesla and Block.

MicroStrategy's third-quarter earnings report revealed that its core software business revenue reached $116.1 million, down 10.3% year-over-year and lower than analyst expectations. The company posted a net loss of $340 million in the third quarter, significantly exceeding the $140 million loss reported in the same period last year. This substantial increase in losses was mainly attributed to a $412 million impairment charge on its approximately $18 billion Bitcoin inventory.

MicroStrategy's stock price experienced a sharp drop of 10% in after-hours trading on Wednesday, though it has risen approximately 260% year-to-date. During the same period, Bitcoin prices have surged over 60%.

MicroStrategy's ambitious plan has garnered widespread attention in the market. Some investors view the move as excessively aggressive, potentially creating financial risks for the company. However, other investors are optimistic about MicroStrategy's future, believing it will benefit from sustained growth in Bitcoin prices.

MicroStrategy's future development will depend on the trajectory of Bitcoin prices and its own operational performance. Whether the company can successfully execute its "21/21 Plan" and secure greater investment returns remains to be seen.

(Edited by Bian Chun)