Michael Saylor, founder and chairman of MicroStrategy, unveiled a bold initiative yesterday: the ’21/21 Plan.’
This ambitious strategy outlines MicroStrategy’s intention to deploy $42 billion over the next three years, with $21 billion sourced from capital raises and another $21 billion from debt financing. With this infusion, MicroStrategy aims to further solidify its position as the largest institutional bitcoin holder.
Expanding Bitcoin Portfolio
In mid-September, MicroStrategy acquired an additional 7,420 bitcoins for $458.2 million, bringing its total bitcoin holdings to 252,220. This investment represents a total of approximately $9.9 billion, with an average purchase price of $39,266 per bitcoin. With the current bitcoin price, MicroStrategy’s portfolio is valued at around $18 billion, resulting in a substantial unrealized gain.
Planned Capital Increases
MicroStrategy has laid out an incremental capital increase strategy, planning for $10 billion in 2025, $14 billion in 2026, and $18 billion in 2027. Saylor is banking on bitcoin’s value appreciating over this period, aiming to boost the company’s equity and bitcoin assets.
Funding Through Convertible Notes
To finance this plan, MicroStrategy is issuing convertible notes, which allow debt to convert into shares upon maturity rather than requiring repayment. This structure aligns with MicroStrategy’s strategy, as it allows the company to benefit from the low interest rates on these loans while potentially raising its share price alongside bitcoin’s value. However, this could lead to shareholder dilution since new shares are issued upon debt conversion. To mitigate dilution, MicroStrategy is targeting bitcoin growth on its balance sheet that outpaces the rate of new share issuance.
BTC Per Share and BTC Yield
Saylor’s strategy sets a target of holding 106 to 110 bitcoin per 100 shares between 2025 and 2027, compared to the 118 bitcoin per share in 2024. To monitor this goal, MicroStrategy is introducing the BTC Yield metric as a key performance indicator (KPI), which measures bitcoin growth per share. The BTC Yield is expected to reach 17.8% in 2024, with targets of 6 to 10% for the 2025-2027 period. This metric will be crucial to balancing share dilution and bitcoin accumulation.
Strategic Outlook
MicroStrategy’s 21/21 Plan represents a calculated move toward deeper institutional bitcoin adoption. The company is betting on a continued long-term rise in bitcoin’s value, which could deliver robust returns. By integrating corporate finance with crypto investment, MicroStrategy maintains a unique role, garnering global attention as a pioneer in this space. As institutional acceptance of bitcoin grows, and regulatory approval for spot bitcoin ETFs takes hold, this strategy could be pivotal in shaping the company’s future valuation.
However, there remains the risk of volatility; if a prolonged bear market, or “crypto winter,” ensues, MicroStrategy’s holdings may experience significant pressure.
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