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How bitcoin helped MicroStrategy become the best-performing stock on Wall Street 

Before 2020, few people outside of the financial world had heard of the publicly traded business-intelligence software company MicroStrategy. But that was before the Virginia-based firm adopted a unique, and then-controversial, strategy of buying bitcoin for its corporate treasury.

How did it turn out? In the years since the firm started buying bitcoin in August of 2020 — eventually purchasing billions of dollars’ worth — its stock has surged an astonishing 2,500%, making it the best performing major U.S. stock in that period. And this week, MicroStrategy entered the top 100 U.S. companies by market cap, reports CoinDesk. 

The company’s $30-plus billion in BTC is worth more than the cash holdings of corporations including Nike and IBM. “Only about a dozen companies, led by Apple Inc. and Alphabet Inc., hold more assets in their corporate treasuries,” notes Bloomberg.

At the same time, MicroStrategy chairman Michael Saylor has become one of the most prominent voices in crypto. Under his leadership, the firm has repeatedly doubled down on BTC, including its latest plan to raise $42 billion over the next three years to acquire even more.

Here’s what you need to know about the firm’s bitcoin strategy, and why it matters. 

What is MicroStrategy?

The firm, which Saylor founded in 1989, creates software that helps businesses sift through their data. After a massive stock price crash in early 2000 during the dot-com bubble era, the company spent decades flying under Wall Street’s radar.

Its low-key status changed when the company disclosed its initial buy of 21,454 bitcoin (worth $250 million at the time) in 2020. With that purchase, MicroStrategy became the first publicly-listed company in the U.S. to add bitcoin to its balance sheet.

At the time, Saylor said the investment reflected “our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”

Why has MicroStrategy bought so much bitcoin?

The company’s decision to use bitcoin as the main asset on its balance sheet was driven in part by its ability to be a “reasonable hedge against inflation,” according to Saylor, especially as the COVID-19 pandemic drove central banks around the world to adopt aggressive stimulus strategies.

Since the initial $250 million purchase, the company has acquired more bitcoin dozens of times, ultimately spending more than $16 billion to buy 331,200 BTC. 

Last week, the company disclosed a $4.6 billionpurchase (its largest yet), bringing the value of its holdings above $30 billion, as of Tuesday.

Despite owning 1.5% of bitcoin’s total supply, the company plans to continue making massive purchases in the years to come. The most recent purchase was part of a recently announced three-year plan to spend $42 billion on bitcoin, using cash raised from a combination of equity sales and convertible debt raises.

How have investors responded?

The company’s bitcoin strategy has helped boost its market cap to roughly $100 billion — more than companies including PayPal and Airbnb — despite the fact that, per Bloomberg, “revenue from the software business has stagnated.” 

The lack of revenue growth hasn’t deterred Wall Street: More than 50% of the company’s sharesare held by institutional investors, with heavyweights like Morgan Stanley and Vanguard increasing their MicroStrategy holdings by 23% and 13% respectively last quarter. 

Are other companies making similar moves? 

Yes, although it remains relatively uncommon. In 2021, Tesla bought $1.5 billion in bitcoin, and still has around $900 million worth of the asset on its balance sheet after selling a large amount of its initial position in the summer of 2022.

Metaplanet, a Japanese investment firm, began buying bitcoin this April and now owns 1,142 BTC, as of Tuesday. The company has also seen its stock rise by more than 500% in that same timeframe. 

And pharmaceutical firm Semler Scientific, which started buying bitcoin around the same time as Metaplanet, has spent roughly $88 million buying 1,273 BTC. Since reporting its first purchase on May 28, the company’s stock is up more than 50%.  

The bottom line… 

MicroStrategy’s ability to continue borrowing capital to increase its BTC reserve suggests the market is supportive of its approach — and if crypto continues to rally, more companies could adopt the strategy. And it might not end there: President-elect Trump has suggested that the U.S. government could even create its own strategic bitcoin reserve