It might not be a part of the index, but MicroStrategy Inc (NASDAQ: MSTR) has outpaced every stock in the S&P 500 — and it’s not even close.
MSTR stock was trading at $388.88 at press time — having rallied by 78.25% over the course of the last 30 days to bring year-to-date (YTD) returns up to 469.90%.
The company, which is the largest corporate holder of Bitcoin (BTC), has lofty ambitions of becoming the first Bitcoin bank, has managed to provide unsurpassed returns and exposure to the largest cryptocurrency in the world.
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MicroStrategy executive chairman Michael Saylor has been outspoken in his support for the decentralized currency for years on end — and while the BTC bear market made his decision to put all of his eggs in one basket seem foolish, now it seems like that was a hasty conclusion.
From November 11 to November 18, MSTR acquired a total of 78,980 BTC, as revealed by press releases and form 8-K filings made with the Securities and Exchange Commission (SEC).
Let’s take a closer look at how exactly it is that MicroStrategy has become the best Bitcoin miner — without doing any actual mining.
How MicroStrategy’s Bitcoin strategy works
Unlike traditional miners, who have to make significant investments in infrastructure to acquire mining capacity, then wait as the actual process of mining chugs along, paying exorbitant energy bills and being at the mercy of price fluctuations all the while, Saylor’s approach is much simpler.
The business uses a metric it calls Bitcoin yield as a simple measure of whether or not its acquisitions benefit shareholders. The metric compares MicroStrategy’s BTC holdings against assumed diluted shares outstanding — in essence, all of the MSTR shares currently being traded plus those that would result from converting notes and exercising stock option awards.
MicroStrategy funds its purchase of BTC by issuing additional shares at the money (ATM) and taking on debt. By tracking the percentage change of Bitcoin yield over time, the company can tell whether or not the acquisitions are accretive to shareholders.
Throughout 2024, the business has managed to secure a BTC yield of 41.8%, per its latest Form 8-K filing — put another way, this equates to a net benefit of 79,130 BTC for shareholders, or roughly 246 BTC per day — all without the high costs associated with mining.
To give readers a perspective, it would take all of the miners on the planet approximately 176 days to achieve that feat.
Is MicroStrategy’s approach to BTC sustainable?
Although Saylor’s approach to accruing BTC has been successful thus far, it is far from risk-free. In a bull market, the rising price of BTC can shield MSTR from share dilution — a stagnating or bearish crypto market could potentially spell disaster for the venture.
However, with the institutional adoption of cryptocurrencies, particularly in light of President-elect Donald Trump’s support for the industry, the risk of that happening appears to be decreasing.
MicroStrategy’s broader vision of becoming the first Bitcoin bank offers a potential pathway to long-term sustainability. By leveraging its vast BTC holdings, the company could provide financial services such as Bitcoin-backed loans, custody solutions, or even facilitate digital asset transactions.
Featured image via MicroStrategy website
