Recently, various 【微策略】 have been trending, so let's first understand how the ancestor of micro strategies, 【MicroStrategy】 (hereinafter referred to as MS), actually works:

1. Is this company MS profitable?
2. What is the basic principle of MS holding BTC?
3. How much interest does MS need to pay each year?
4. How does MS make money by holding BTC?
5. Why are others willing to buy MS's bonds and stocks instead of directly buying BTC?
6. Can MS crash BTC? Can creditors forcibly redeem BTC?
7. Is there a risk of a sudden collapse for MS in the short term?

1. Is the company MS profitable?
Not profitable! MS itself is actually a software company, with a main business loss of 50 million USD in 2024.

2. What is the basic principle of MS holding BTC?
By issuing bonds convertible into stocks to raise funds in the financial market, and then using the raised funds to purchase BTC and repay debts while paying interest. Since BTC has been continuously rising, the company's assets have also been increasing, allowing for more financing, which in turn enables the purchase of more BTC, achieving the rollover of debts while paying interest.

3. How much interest does MS need to pay each year?
Currently, it is necessary to pay approximately 35 million in bond interest and 146 million in dividends each year, totaling about 181 million in interest.

4. How can MS make money by hoarding BTC?
Holding BTC itself does not make money and requires paying interest. However, by accumulating BTC and the appreciation of BTC, the company's net assets have increased, which ultimately reflects in the appreciation of the stock. All shareholders, including the company, can profit through stock operations. Currently, the company has issued about 7 billion in debt but holds BTC with a market value of over 70 billion, resulting in a leverage ratio of about 10 times. For every 1% increase in BTC price, the increase in the company's asset value far exceeds 1%, leading to explosive returns for shareholders during BTC's upward cycles! Another key point: the interest cost of $181 million accounts for a very low proportion of BTC's asset value (about 0.25% = 181 million / 7.177 billion). If BTC's annualized growth rate exceeds 0.25%, the increase in asset value can cover the interest cost. At least based on past data, the annualized growth rate of BTC is far greater than 0.25%, which means that based on current data, this "borrowing new to pay old" game can continue.

5. Why are others willing to buy MS's bonds and stocks instead of directly buying BTC?
There are several reasons, but the main reason is that it is more convenient and compliant for some institutions to buy stocks and bonds, and there are more financial instruments available to utilize. At the same time, they can also earn interest. Moreover, investing in MS not only means leveraging BTC but also additionally investing in a company, even though this company's actual business is not currently profitable, who knows what the future holds.

6. Can MS dump BTC? Can creditors forcibly redeem BTC?
MS can actively sell BTC, but the boss of MS has repeatedly emphasized that he will not sell a single BTC! In fact, from the operating principle above, everyone can see that BTC is now MS's golden goose, and they definitely wouldn't want to actively slaughter it.
Creditors cannot directly request the exchange of BTC; at most, they can request the conversion of bonds into stocks.

7. Is there a risk of a sudden collapse for MS in the short term?
MS's main bonds will only start to be redeemed in 2027, meaning that before 2027, MS has no debt pressure. After maturity, it will depend on the continuous financing ability. If BTC is still on an upward trend by then, theoretically, the financing capability will only strengthen. But what if BTC crashes? Currently, MS's BTC holding cost is $71,756, and if it falls below this price, the company's assets will turn negative. However, since bonds cannot be directly redeemed for BTC, the company will not immediately go bankrupt and liquidate, which would not lead to a BTC crash; at most, the stock will plummet. But if BTC maintains a low price for a long time and the market loses confidence in BTC, it will result in MS losing the ability to continue financing. At that time, the "borrowing new to pay old" game will no longer be viable, and the company will ultimately have to sell BTC to pay interest, entering a negative cycle. However, for BTC to maintain a low price for the long term, it needs to be sustained long enough to exhaust MS's current financing completely. This duration is difficult to judge precisely, but at least it will take more than 5 years.

[Summary]

The core of this MS gameplay is that the market has a strong long-term consensus on BTC, and MS itself also has strong financing capabilities. If either of the two core elements is missing, the game cannot operate.

Therefore, whether it is to determine whether MS can continue, or to assess whether other cryptocurrencies' micro-strategies can be implemented, it is mainly to focus on these two core elements.

The mechanism of micro-strategy games itself is not very mysterious; it is just a mechanism of "parent and child coins" that has been overplayed in the DEFI and GAMEFI sectors. The parent coin is BTC, primarily used for financing, while the child coin is like a stock. By using the interest from the child coin and controlling its circulation, it attracts more people to participate in the parent coin. The parent coin itself does not have a mechanism-level release, so it is easier to control, and there is a strong consensus around the parent coin, which greatly enhances the sustainability of the game.