Disclaimer: The analyst who wrote this article owns shares in Strategy.
Strategy (MSTR) adopted a bitcoin standard five years ago today, on Aug. 11, 2020, with its first purchase of 21,454 BTC for $250 million. The acquisition marked a historic shift in corporate treasury strategy.
To that point, former AI and software development company had seen its share price stagnate for two decades after the early 2000 tech boom-and-bust, falling over 95% from its peak.
However, since August 2020, MSTR has delivered 100% average annual returns, compounding to over 3,000% cumulative gains, while bitcoin itself has returned nearly 1,000% over the same period.
To fund its BTC accumulation, the company has employed diverse strategies, raising $46 billion via equity and credit, which includes $8.2 billion in outstanding convertible debt and four perpetual preferred stock offerings, STRK, STRF, STRD, and STRC, designed to appeal to different segments of the yield curve.
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Fresh buys continue
The company Monday morning disclosed the purchase of another 155 BTC for $18 million — a rather small weekly buy, but nevertheless bringing its total stoack to 628,946 coins valued at about $76 billion. That representis 3% of bitcoin’s fixed 21 million supply. With an average cost of about $74,000 per BTC, the company sits on unrealized gains of roughly $30 billion, or 65%.
MSTR is today one of the most actively traded stocks, posting $4.4 billion in daily trading volume just behind Google (GOOG) at $4.9 billion. Open interest in MSTR options totals $90 billion, also second to Google at $99 billion. Despite a $112 billion market cap compared to Google’s $2.4 trillion, the trading activity reflects the intense focus on MSTR.
Its success has inspired a wave of bitcoin treasury strategies among other corporations. The top 100 public companies now collectively own 964,314 BTC, much of it financed through capital raises that follow the MSTR playbook.
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