MicroStrategy Bitcoin Strategy Explained (Simple Breakdown)

MicroStrategy (MSTR) used to be just a software company – but today, it’s the world’s biggest corporate bitcoin holder. This guide explains the MicroStrategy bitcoin strategy in plain English: how it works, why they’re doing it, and what the risks are. You’ll also see how MSTR has performed compared to bitcoin, Nvidia stock, and the Nasdaq 100.

What is MicroStrategy?

MicroStrategy is a business software company that’s been around since 1989. In 1998, it became a publicly traded stock, with its shares trading under the ticker MSTR. But the company never got famous until 2020 – when it started buying loads of bitcoin for its corporate treasury. Most companies use their treasury to hold spare cash and investments, but MicroStrategy filled theirs with bitcoin.

MicroStrategy still sells analytics software, but now it’s more of a bitcoin holding company than a tech firm. As of March 2025, MicroStrategy owns around 506,000 bitcoin – with no signs of slowing down (see chart below). That’s about 2.4% of all 21 million bitcoin that will ever exist. If you read this article at later date, they’ll probably own even more.

MicroStrategy paid roughly $33.7 billion to buy that bitcoin at an average cost of around $66,600 per coin. At today’s prices, that stash is worth closer to $43 billion.

Side note: MicroStrategy rebranded as “Strategy” in February 2025 — but most people still just call it MicroStrategy.

Who is Michael Saylor?

Michael Saylor is MicroStrategy’s co-founder and former CEO. He’s the guy who kicked off the bitcoin plan. Saylor has been in the business world for decades. But now, he’s best known as a bitcoin maxi with a strong Twitter game.

Saylor stepped down as CEO in 2022 so he could focus 100% on MicroStrategy’s bitcoin strategy. He now serves as executive chairman – and full-time bitcoin evangelist. He sees bitcoin as a digital property – like houses in London before they got expensive.

Saylor’s move seemed reckless to the traditional finance crowd. Why would a corporate treasury (which is meant to be a “safe”) hold such a volatile asset? Well, here’s what Saylor said in his own words in 2020, after buying 38,250 bitcoin for MicroStrategy: 

“We just had the awful realization that we were sitting on top of a $500 million ice cube that’s melting.”—Michael Saylor.

Saylor was talking about the rapidly eroding value of MicroStrategy’s cash reserves from inflation. With interest rates near zero in 2020 and the money supply ballooning, sitting on cash felt like a guaranteed loss. Bitcoin offered a hedge – a way to protect the company’s balance sheet from the relentless dilution of cash.

How the MicroStrategy bitcoin strategy works

Here’s the three-step playbook:

Step 1: Raise money

MicroStrategy raises cash using:

• Convertible notes (a type of low-interest debt that can turn into shares)
• Stock sales (creating or “issuing” new MSTR shares to raise capital)

Investors are happy to buy those notes or shares – because they believe in bitcoin, and Saylor’s playbook. The company has raised billions this way.

Step 2: Buy bitcoin

MicroStrategy uses that cash to buy bitcoin. Sometimes it’s small buys each week. Other times, it’s billions in one go. In February 2025, for example, they bought 20,000 BTC in a single purchase. They’re not trading it. They’re stacking and holding it “forever”.

Step 3: Ride the feedback loop

Here’s how the strategy feeds on itself:

• MicroStrategy raises money with convertible notes to buy bitcoin.
• That helps bitcoin’s price rise (since they buy a lot of bitcoin).
• The MSTR stock price goes up (since the value of their bitcoin assets rises).
• With a higher stock price, MicroStrategy can raise even more money… and buy more bitcoin.

It’s a powerful feedback loop. And in bull markets, it can work very well.

What are convertible notes?

Convertible notes are a way for companies to borrow money – kind of like IOUs with a bonus attached. MicroStrategy uses them to raise cash from investors. In return, those investors get paid a bit of interest. They also have the option to convert the notes into MSTR shares later on – usually at a discount.

If the MSTR price goes up, that conversion option can be very profitable for convertible note holders. If it doesn’t, the investor still gets their interest and capital back. That can make convertible notes more appealing than regular company shares – they offer some downside protection, with extra upside if the company does well.

Since MicroStrategy’s share price moves closely with bitcoin, these notes have effectively become a “low-risk” way for investors to bet on bitcoin – without holding any themselves. The MSTR stock is another story, though (more on that later).

Risks of the MicroStrategy bitcoin strategy

Leverage: MicroStrategy borrows money to buy bitcoin. That works great when bitcoin is going up in a bull market. But if the price drops in a bear market, things can get really messy. The company still has to pay interest and repay the debt. That gets harder if its bitcoin stash is underwater.

Stock volatility: Bitcoin is already known for big price swings. MicroStrategy stock is even more extreme. It often moves 10% in a single day – not something you’d expect from a Nasdaq-listed company.

One-trick pony: MicroStrategy still has a software business, but it’s not the main story anymore. Everything rides on bitcoin. If bitcoin trends down for a few years, the whole strategy could fall apart.

Bitcoin and stock market risk: MicroStrategy can move down a lot in a general stock market crash (since it’s a stock). And if bitcoin crashes, it can take an even bigger beating (since it’s essentially a leveraged bitcoin bet).

MicroStrategy performance vs bitcoin, Nvidia, & the Nasdaq

Here’s where it gets interesting. Since MicroStrategy started buying bitcoin in August 2020, its stock is up about 2,200% (red, chart below). In that time, MSTR has outperformed bitcoin (630%, blue), Nvidia stock (940%, green), and the Nasdaq 100 index (80%, white). But as the chart shows, MSTR tends to be way more volatile than those other investments. In its 2021 to 2023 bear market, MSTR collapsed by 90%. 

Live MicroStrategy bitcoin holdings tracker

Wondering how much bitcoin MicroStrategy owns right now?

The live tracker below shows the company’s bitcoin balance, how much it paid, the average cost per coin, and what it’s all worth today. It also tracks unrealized gains or losses – updated in real time.

The chart is courtesy of Saylor Tracker. If the chart doesn’t load, click here to view it directly.

Key takeaways

• MicroStrategy owns more bitcoin than any other company — over 2% of the total 21 million coin supply.
• It buys bitcoin using cash, stock, and convertible debt — then holds it “forever”.
• The stock (MSTR) has outperformed bitcoin in bull runs, but it’s way more volatile.

As usual, none of this is investment advice. If you liked this piece, check out my free newsletter for how-to guides and investment insights across crypto, stocks, metals, and more.