Strategy, formerly known as MicroStrategy, started out as a software company helping businesses analyze their internal and external data. This side of their business is still operating to this day, but in recent years they have started pivoting towards becoming more of a Bitcoin treasury company. They are now known as the largest corporate holder of Bitcoin, with approximately 687,000 bitcoins in their holdings, which is more than twice the amount that the U.S. government owns. Six years ago, they started allocating their excess cash to this asset, but over time they introduced additional capital-raising tools, leveraging their income, and taking on more risk to pursue this strategy.
Strategy was founded in 1989. The company experienced rapid growth in its first 15 years, focusing on establishing itself as one of the largest business intelligence companies. From around 2010 to 2020, the company began to stagnate, with its revenue and gross profit remaining roughly the same, due to heavy competition from other data service providers and tech giants. This led to a situation where the company had a lot of accumulated cash and investments but struggled to grow its business.
Their previous CEO, and now Executive Chairman, Michael Saylor, was the main supporter of the idea that the company should start investing in Bitcoin. He describes it as “digital gold” and believes it is the superior store of value, which is why he was pushing for it to be the company’s sole long-term asset and not sold. First, they used their existing cash, which would have otherwise depreciated if left sitting. A few months later, this approach led them to take on debt for further acquisitions, which they repaid using the company’s profits.
One of Strategy’s main ways of raising capital is by issuing convertible bonds. This is an attractive option for lenders, as they can either convert the bonds into the company’s stock if the price rises, or receive their lent money back with interest if the price falls. This agreement keeps interest rates low, which benefits Strategy. If the stock price increases, the company simply issues new shares, converting debt into equity. If the stock price falls, they must refinance or repay the debt, which they can do using their income.
Recently, in 2025, Strategy began implementing a more advanced borrowing strategy by issuing preferred stock. Unlike common stock, preferred shares do not provide ownership in the company. Instead, they act like debt: investors do not receive repayment of the principal, but they receive higher dividends. Each share has slightly different characteristics designed to attract different types of investors, but they share the same idea of trading at $100 and offering an approximate 10% yield, which investors can buy or sell at their free will. Issuing new shares or making buybacks allows the company to keep the price close to $100. The rationale behind this strategy is that Michael Saylor expects Bitcoin to return 29% per year over the next 20 years. Paying only a 10% dividend, without repaying the principal, therefore appears very attractive to him.
At the beginning of 2026, Strategy has enough cash on the sidelines to cover approximately three years’ worth of dividend payments, providing a buffer if things do not go as planned. However, it is important to consider that multiple obligations can accumulate. If the price of Bitcoin falls drastically, the company would need to manage dividend payments, convertible loan obligations, and the preferred stock price to prevent it from dropping too far. This scenario would likely put the company in a stressful position, which could be reflected in a falling stock price. The risk of bankruptcy, however, as of right now is unlikely, as the company has both regular income and substantial cash reserves.
Strategy is clearly trying to stand out from other companies and achieve something extraordinary. This approach carries significant risks, which can result in huge returns if they are correct, or severe losses if they are not. Investors in the company are aware of these risks and often use the stock as a diversification tool to gain exposure to Bitcoin. The company does not appear to be slowing down its aggressive strategy anytime soon. Its future is closely tied to Bitcoin, in which it has the utmost conviction.
-Leonards Alksnītis