Most people think that billionaire Michael Saylor's publicly traded company MicroStrategy is a huge and risky bet on Bitcoin. But a closer look reveals that it is a masterpiece, a blueprint for manipulating traditional finance to harness the magic dust that fuels the cryptocurrency craze.

The New Year's Eve at Villa Vecchia was a dazzling scene of orange and gold, straight out of Fitzgerald's most opulent fantasies. Over 500 people crowded the neatly trimmed lawn of the century-old mansion, whose Versailles-style banquet hall had hosted celebrities like Margaret Thatcher, Henry Kissinger, and Mikhail Gorbachev.

The real reason for the feast was Bitcoin's recent breakthrough of $100,000 (not the arrival of 2025). Waiters moved around with champagne on silver trays, hors d'oeuvres stamped with the ubiquitous letter B, and dancers in golden leotards waving shimmering orange spheres in homage to Bitcoin's iconic hue. In the center of the garden, a giant playing card was faintly visible, with the king's face replaced by a brazen B.

The Water Party Continues on the Usher

The water party continued on the Usher, a 154-foot superyacht that had appeared in the 2015 movie "Entourage," gleaming in the Miami skyline. Shuttle buses streamed back and forth, carrying Bitcoin executives, influencers, and most importantly, institutional investors, all dressed in "Bitcoin chic" (orange suits, B-logo accessories). Two giant projectors played clips predicting Bitcoin would soar into the millions, while a DJ in a space helmet conducted thumping bass tracks among the swaying palm trees.

"I'm kind of getting tired of winning," joked a reveler wearing a black hat printed with Satoshi Nakamoto. Everyone at the party had crypto cred: the man in the Satoshi hat was David Bailey, the 34-year-old CEO of BTC Inc. and publisher of Bitcoin Magazine, who had hosted the Bitcoin conference in July where Donald Trump vowed to make America "the cryptocurrency capital of the Earth" and establish a national Bitcoin reserve.

Michael Saylor: The Host and Prophet

Michael Saylor, the 59-year-old owner and host of Villa Vecchia, moved through the reveling crowd in his signature black blazer, blue jeans, and T-shirt (printed with a B on the front). He warmly accepted handshakes and selfie requests. Here, Bitcoin was God, and Saylor was its prophet.

Cryptocurrency was like a second coming for Saylor, who had made and lost over $10 billion during the initial dot-com bubble. After graduating from MIT in 1989, he co-founded the software company MicroStrategy in Tyson's Corner, Virginia. The company initially dealt in data mining and business intelligence software but later ran into accounting issues with the Securities and Exchange Commission. In 2000, the company paid a fine, settled with the federal government, and restated its performance from previous years.

MicroStrategy's Transformation

For the next two decades, MicroStrategy's sales performance was lackluster, with a market cap hovering around $1 billion. Everything changed in 2020 when Saylor decided to make Bitcoin the core strategy of MicroStrategy.

Last year, after the SEC approved Bitcoin ETFs from giants like BlackRock and Fidelity, the price of cryptocurrency soared, more than doubling within 12 months and breaking through $100,000 in early December. Just before Christmas, MicroStrategy joined the Nasdaq 100, stimulating further demand for its stock, which rose by over 700% last year as it issued bonds and accumulated more Bitcoin (it now owns 471,107). Saylor's company is now the largest holder of digital assets, second only to the elusive Satoshi Nakamoto, who is said to hold 1 million Bitcoins. During 2024, Saylor's net worth jumped from $1.9 billion to $7.6 billion. A month into the new year, his fortune reached $9.4 billion.

Critics and Short Sellers

MicroStrategy's astonishing gains have stirred up a horde of critics and short sellers who can't comprehend why a small software company holding just $4.8 billion worth of Bitcoin has a market cap of $84 billion. But what Saylor's critics fail to grasp is that MicroStrategy has skillfully straddled two realms: one bound by traditional finance rules where the company issues debt and stock, traded by hedge funds, traders, and other institutions; and the other dominated by devout, die-hard believers who think Bitcoin will usher in a better world.

Embracing and Cultivating Volatility

The driving force behind MicroStrategy's success is embracing and cultivating volatility, a significant characteristic of its core asset. Volatility is the archenemy of traditional investors but the best friend of options traders, hedge funds, and retail speculators, making MicroStrategy one of the most active stocks in the market. Although its annual revenue is relatively modest at $496 million, its daily trading volume rivals that of the seven tech giants (Meta, Apple, Alphabet, Microsoft, Amazon, Tesla, and Nvidia).

"People think it's crazy," Saylor said. "How can such a small company have such high liquidity? It's because we've placed a crypto reactor in the middle of the company, attracting capital and then spinning it. This increases the stock's volatility and makes our options and convertible bonds the most interesting and best-performing products in the market."

Convertible Bonds and Implied Volatility

Michael Saylor was spot on about the popularity of the $7.3 billion in convertible bonds MicroStrategy has issued since 2021. Every minute of the trading day, MicroStrategy's stock price is amplified in real-time by the constant fluctuations of Bitcoin, thereby increasing the implied volatility of the call options inherent in its convertible bonds. Unlike regular bonds, convertible bonds offer debt holders the security of being able to exchange their bonds for MicroStrategy stock at a predetermined price before maturity. Every trader trained in the Black-Scholes options pricing formula knows that high implied volatility increases the value of options. As a result, Saylor can issue convertible bonds with virtually no interest cost.

So far, MicroStrategy has issued six convertible bonds with maturities ranging from 2027 to 2032 and interest rates varying from 0% to 2.25%. In the public bond market, where liquidity has been shrinking due to the boom in private credit, institutional investors are eager for excess returns. MicroStrategy's bonds are not only one of the few ways for large investors like Allianz, the German insurance giant, and State Street, the US bank, to invest in digital assets, but they are also among the best-performing bonds in the market, returning over 250% since issuance. Even MicroStrategy's $3 billion five-year bond issued in November, with a 0% coupon rate and a strike price of $672 (80% higher than MicroStrategy's current stock price), has risen by 89% in just a few months.

Volatility Is the Life Force

These were the three words MicroStrategy co-founder Michael Saylor tweeted in March last year, revealing the elixir behind the exceptional performance of its stock and bonds: the implied volatility of the company's options, driven by his accumulation of Bitcoin. Many traders crave volatility, expecting MicroStrategy's stock price to fluctuate by over 90% in the next month, compared to Tesla's 60% and Amazon's 30%.

Institutional Investors and Perpetual Issuance

Saylor understands that institutional investors, who measure performance on a quarterly basis, will continue to buy his high-risk stock to boost their portfolio returns. Typically, issuing a large amount of convertible bonds like MicroStrategy would dilute the company's stock, but in this case, the convertible bonds have had a bullish effect because they represent future demand for increasingly higher-priced stocks. Through secondary offerings and convertible bond issuances, MicroStrategy's outstanding shares have grown from 97 million in 2020 to 246 million. During the same period, its stock price has risen by 2,666%. At the end of January, its shareholders voted to dramatically increase the company's authorized shares to 10.3 billion. This cycle perpetuates itself: issuing billions of low-cost or no-cost debt and equity, driving up the Bitcoin price through massive purchases, and propelling MicroStrategy's stock to significant volatility. Round and round it goes.

"They've discovered a financial market loophole and are exploiting it," marveled Richard Bivort, a former Nomura convertible bond trader and managing partner at Syz Capital, an alternative investment firm in Zurich, Switzerland.

Bitcoin Advocacy and a New Financial Metric

Saylor makes no bones about his advocacy for Bitcoin, which is understandable. In August last year, he invented an entirely new financial metric called Bitcoin Yield or BTC Yield. This "yield" has nothing to do with any generated income but merely measures the percentage change over time in the ratio of the company's held Bitcoin to its fully diluted stock. His initial target was an annual growth of 4% to 8%, but MicroStrategy's data revealed in January showed a Bitcoin yield of 48% for the fourth quarter and 74.3% for the whole of 2024—numbers that, while large, are meaningless and serve as bait for his adoring followers.

Ben Werkman, a former commercial banker, consultant, and early investor in the company's Bitcoin strategy, said that trying to value MicroStrategy the old-fashioned way would drive you insane. Saylor "shut down the P&L mindset, saying, 'We're going to start from the company's net asset value and focus on leveraging our balance sheet strengths,' which in this case means acquiring more Bitcoin."

The "21/21" Plan and Bitcoin Acquisition

This is precisely what MicroStrategy is doing. In October, Saylor unveiled a plan called "21/21" to raise up to $42 billion over the next three years (half through equity financing and half through debt financing) to buy more Bitcoin. Just in November and December alone, the company acquired nearly 200,000 Bitcoins worth about $18 billion.

As long as the price of Bitcoin continues to rise, everything will go smoothly. But what if Bitcoin crashes as it has done several times before?

"Scale is everything because liquidity is everything. MicroStrategy is the most singular source of liquidity for trading Bitcoin-related risk, including both the spot market and the options market, the latter being even more important."

MicroStrategy's Financial Engineering and Imitators

Unless the end of the world truly arrives, MicroStrategy should be fine. Bitcoin would have to plummet by over 80% from its current level above $100,000 and stay there for at least two years for MicroStrategy to be unable to service its current debt. Saylor once again demonstrates his knack for exploiting capital markets and bond investor behavior.

MicroStrategy's $7 billion in debt is all unsecured, and technically, none of the Bitcoins in its treasury can be used as collateral. Moreover, with the company's current stock price at $373, its over $4 billion in debt is already "money good," or effectively equity.

"Effectively, MicroStrategy has very little debt on its balance sheet," said Jeff Park, head of alpha strategy at Bitwise, a San Francisco-based crypto asset management firm. MicroStrategy's Bitcoin holdings are unlikely to be liquidated because institutional bondholders have a high tolerance for refinancing, even in the worst-case scenario of bankruptcy.

What stops other companies from replicating Saylor's Bitcoin financial engineering? Nothing. Many have already started to follow suit. According to Park, Bitwise has counted around 90 publicly traded companies, including well-known firms like Tesla and Block, that have added Bitcoin to their balance sheets. In March this year, his firm will launch the Bitwise Bitcoin Standard Companies ETF, an index weighted by the Bitcoin holdings of 35 publicly traded companies that hold at least 1,000 Bitcoins (about $100 million). MicroStrategy will dominate this index.

Imitators are providing ammunition for MicroStrategy's detractors. Kerrisdale Capital, an investment firm based in Miami, released a short report on the stock in March, stating that MicroStrategy's stock represented a rare and unique way to get exposure to Bitcoin, but that this is no longer the case. However, Park believes that, like Netflix in the streaming space, MicroStrategy's first-mover advantage and scale set it apart.

"Scale is everything because liquidity is everything. Whether it's the spot market or the options market, they are the most liquid sources for trading Bitcoin-related risk," Park said. "MicroStrategy's options market is by far the deepest single-name options market in the world." MicroStrategy's fervent options have even given rise to a fund called YieldMax MSTR Options Income Strategy ETF, which generates income by selling call options. The one-year-old fund has a 106% annual return and has accumulated $1.9 billion in assets.

Saylor's Reflections and Vision

Sitting by the pool at Villa Vecchia, with his three parrots—Hodl, Satoshi, and Max—chattering behind him, Saylor dismissed the critics. "Traditional business wisdom over the past 40 years has been that capital is a liability and volatility is bad. The Bitcoin standard says capital is an asset and volatility is good—it's a feature," he insisted. "They live in a flat world, a pre-Copernican era. We're sitting on a train going 60 miles an hour, spinning a gyroscope with 30 tons on top, while the rest of the world stands still on the tracks."

This is not the first time Michael Saylor has flown close to the sun.

He was born in 1965 at an Air Force base in Lincoln, Nebraska, steeped in military discipline from a young age. His father, a chief master sergeant, moved the family around various Air Force bases worldwide before finally settling near Wright-Patterson in Ohio—the home of the Wright Brothers' flying school.

He entered MIT on a full Air Force ROTC scholarship to study aeronautics and astronautics, writing a thesis on computer simulations of Italian Renaissance city-states. In his spare time, he enjoyed playing guitar in a rock band and flying gliders. He graduated with highest honors in 1987 and was commissioned as an Air Force second lieutenant, but his dream of becoming a fighter pilot was shelved due to a heart murmur, which turned out to be a misdiagnosis.

When 1 + 1 = 3, by doubling down on Bitcoin investments, MicroStrategy's market cap has grown 60 times in four years, even when Bitcoin prices are down.

MicroStrategy's Founding and Early Struggles

At 24, he co-founded MicroStrategy with MIT fraternity brother Sanju Bansal. At the time, few people understood the potential of data analytics, but the company was an early entrant into the field. Riding the internet boom, the company went public in 1998, and by 2000, its market cap soared above $24 billion. Saylor's net worth peaked at nearly $14 billion, and he became a tech evangelist, prophesying a world where data would flow like water. "We're going to use our technology to eliminate the entire supply chain," Saylor told Forbes in late 1998. "We're going to go all out to win a permanent victory over the entire global industry."

Then, the company crashed. On March 10, 2000, MicroStrategy's stock price hit a peak of $313 per share, over 60 times its IPO price. Two weeks later, the company announced it needed to restate its financial performance, and the stock price plummeted to $72. The Securities and Exchange Commission charged Saylor and others with accounting fraud, and MicroStrategy later settled these charges for $11 million. Within two years, the company's stock price fell below $1. Saylor's $13 billion fortune evaporated.

"This was the darkest moment of my life. It's terrible when people lose money because they trusted you," he said.

MicroStrategy's Bitcoin Strategy

In 2020, after the government had spent trillions of dollars on COVID-19 related stimulus measures over several years, Saylor was convinced that the remaining $530 million in cash and short-term investments on MicroStrategy's balance sheet would be best invested in Bitcoin. The US government could print dollars at will—and it was doing so aggressively—but Bitcoin's design had a hard cap: the number of Bitcoins would never exceed 21 million.

If Bitcoin prices crashed, MicroStrategy's stock would fall more severely and swiftly than Bitcoin itself. But don't dismiss Saylor for being too clever. Many other companies have followed MicroStrategy's lead—the company now calls itself "the world's first and largest Bitcoin Treasury."

Metaplanet's Survival Strategy

Some publicly traded companies, like Metaplanet, have even relied on Bitcoin for survival. This Tokyo-based hotel chain faced an existential crisis during the pandemic when Japan closed its borders to tourists. The small hotel operator sold nine of its ten hotels and issued stocks and bonds to buy hotels with $70 million worth of Bitcoin. Metaplanet's stock trades on the Tokyo Stock Exchange and over-the-counter markets, rising 2,600% in 2024, and its current market cap is $1 billion, despite holding only $183 million worth of Bitcoin. The company's homepage now reads "Securing the Future with Bitcoin," barely mentioning hotels. "We are very grateful to Michael Saylor for devising a business plan for the world to follow," said Metaplanet CEO Simon Gerovich, a guest at Saylor's New Year's party.

"I've invented 20 things and worked hard to make them successful, but none of them have changed the world. Satoshi created one thing, gave it to the world, and then disappeared. It has made me more successful than any of my own ideas."

Most people think that billionaire Michael Saylor's publicly traded company MicroStrategy is a huge and risky bet on Bitcoin. But a closer look reveals that it is a masterpiece, a blueprint for manipulating traditional finance to harness the magic dust that fuels the cryptocurrency craze.

The New Year's Eve at Villa Vecchia was a dazzling scene of orange and gold, straight out of Fitzgerald's most opulent fantasies. Over 500 people crowded the neatly trimmed lawn of the century-old mansion, whose Versailles-style banquet hall had hosted celebrities like Margaret Thatcher, Henry Kissinger, and Mikhail Gorbachev.

The real reason for the feast was Bitcoin's recent breakthrough of $100,000 (not the arrival of 2025). Waiters moved around with champagne on silver trays, hors d'oeuvres stamped with the ubiquitous letter B, and dancers in golden leotards waving shimmering orange spheres in homage to Bitcoin's iconic hue. In the center of the garden, a giant playing card was faintly visible, with the king's face replaced by a brazen B.

The Water Party Continues on the Usher

The water party continued on the Usher, a 154-foot superyacht that had appeared in the 2015 movie "Entourage," gleaming in the Miami skyline. Shuttle buses streamed back and forth, carrying Bitcoin executives, influencers, and most importantly, institutional investors, all dressed in "Bitcoin chic" (orange suits, B-logo accessories). Two giant projectors played clips predicting Bitcoin would soar into the millions, while a DJ in a space helmet conducted thumping bass tracks among the swaying palm trees.

"I'm kind of getting tired of winning," joked a reveler wearing a black hat printed with Satoshi Nakamoto. Everyone at the party had crypto cred: the man in the Satoshi hat was David Bailey, the 34-year-old CEO of BTC Inc. and publisher of Bitcoin Magazine, who had hosted the Bitcoin conference in July where Donald Trump vowed to make America "the cryptocurrency capital of the Earth" and establish a national Bitcoin reserve.

Michael Saylor: The Host and Prophet

Michael Saylor, the 59-year-old owner and host of Villa Vecchia, moved through the reveling crowd in his signature black blazer, blue jeans, and T-shirt (printed with a B on the front). He warmly accepted handshakes and selfie requests. Here, Bitcoin was God, and Saylor was its prophet.

Cryptocurrency was like a second coming for Saylor, who had made and lost over $10 billion during the initial dot-com bubble. After graduating from MIT in 1989, he co-founded the software company MicroStrategy in Tyson's Corner, Virginia. The company initially dealt in data mining and business intelligence software but later ran into accounting issues with the Securities and Exchange Commission. In 2000, the company paid a fine, settled with the federal government, and restated its performance from previous years.

MicroStrategy's Transformation

For the next two decades, MicroStrategy's sales performance was lackluster, with a market cap hovering around $1 billion. Everything changed in 2020 when Saylor decided to make Bitcoin the core strategy of MicroStrategy.

Last year, after the SEC approved Bitcoin ETFs from giants like BlackRock and Fidelity, the price of cryptocurrency soared, more than doubling within 12 months and breaking through $100,000 in early December. Just before Christmas, MicroStrategy joined the Nasdaq 100, stimulating further demand for its stock, which rose by over 700% last year as it issued bonds and accumulated more Bitcoin (it now owns 471,107). Saylor's company is now the largest holder of digital assets, second only to the elusive Satoshi Nakamoto, who is said to hold 1 million Bitcoins. During 2024, Saylor's net worth jumped from $1.9 billion to $7.6 billion. A month into the new year, his fortune reached $9.4 billion.

Critics and Short Sellers

MicroStrategy's astonishing gains have stirred up a horde of critics and short sellers who can't comprehend why a small software company holding just $4.8 billion worth of Bitcoin has a market cap of $84 billion. But what Saylor's critics fail to grasp is that MicroStrategy has skillfully straddled two realms: one bound by traditional finance rules where the company issues debt and stock, traded by hedge funds, traders, and other institutions; and the other dominated by devout, die-hard believers who think Bitcoin will usher in a better world.

Embracing and Cultivating Volatility

The driving force behind MicroStrategy's success is embracing and cultivating volatility, a significant characteristic of its core asset. Volatility is the archenemy of traditional investors but the best friend of options traders, hedge funds, and retail speculators, making MicroStrategy one of the most active stocks in the market. Although its annual revenue is relatively modest at $496 million, its daily trading volume rivals that of the seven tech giants (Meta, Apple, Alphabet, Microsoft, Amazon, Tesla, and Nvidia).

"People think it's crazy," Saylor said. "How can such a small company have such high liquidity? It's because we've placed a crypto reactor in the middle of the company, attracting capital and then spinning it. This increases the stock's volatility and makes our options and convertible bonds the most interesting and best-performing products in the market."

Convertible Bonds and Implied Volatility

Michael Saylor was spot on about the popularity of the $7.3 billion in convertible bonds MicroStrategy has issued since 2021. Every minute of the trading day, MicroStrategy's stock price is amplified in real-time by the constant fluctuations of Bitcoin, thereby increasing the implied volatility of the call options inherent in its convertible bonds. Unlike regular bonds, convertible bonds offer debt holders the security of being able to exchange their bonds for MicroStrategy stock at a predetermined price before maturity. Every trader trained in the Black-Scholes options pricing formula knows that high implied volatility increases the value of options. As a result, Saylor can issue convertible bonds with virtually no interest cost.

So far, MicroStrategy has issued six convertible bonds with maturities ranging from 2027 to 2032 and interest rates varying from 0% to 2.25%. In the public bond market, where liquidity has been shrinking due to the boom in private credit, institutional investors are eager for excess returns. MicroStrategy's bonds are not only one of the few ways for large investors like Allianz, the German insurance giant, and State Street, the US bank, to invest in digital assets, but they are also among the best-performing bonds in the market, returning over 250% since issuance. Even MicroStrategy's $3 billion five-year bond issued in November, with a 0% coupon rate and a strike price of $672 (80% higher than MicroStrategy's current stock price), has risen by 89% in just a few months.

Volatility Is the Life Force

These were the three words MicroStrategy co-founder Michael Saylor tweeted in March last year, revealing the elixir behind the exceptional performance of its stock and bonds: the implied volatility of the company's options, driven by his accumulation of Bitcoin. Many traders crave volatility, expecting MicroStrategy's stock price to fluctuate by over 90% in the next month, compared to Tesla's 60% and Amazon's 30%.

Institutional Investors and Perpetual Issuance

Saylor understands that institutional investors, who measure performance on a quarterly basis, will continue to buy his high-risk stock to boost their portfolio returns. Typically, issuing a large amount of convertible bonds like MicroStrategy would dilute the company's stock, but in this case, the convertible bonds have had a bullish effect because they represent future demand for increasingly higher-priced stocks. Through secondary offerings and convertible bond issuances, MicroStrategy's outstanding shares have grown from 97 million in 2020 to 246 million. During the same period, its stock price has risen by 2,666%. At the end of January, its shareholders voted to dramatically increase the company's authorized shares to 10.3 billion. This cycle perpetuates itself: issuing billions of low-cost or no-cost debt and equity, driving up the Bitcoin price through massive purchases, and propelling MicroStrategy's stock to significant volatility. Round and round it goes.

"They've discovered a financial market loophole and are exploiting it," marveled Richard Bivort, a former Nomura convertible bond trader and managing partner at Syz Capital, an alternative investment firm in Zurich, Switzerland.

Bitcoin Advocacy and a New Financial Metric

Saylor makes no bones about his advocacy for Bitcoin, which is understandable. In August last year, he invented an entirely new financial metric called Bitcoin Yield or BTC Yield. This "yield" has nothing to do with any generated income but merely measures the percentage change over time in the ratio of the company's held Bitcoin to its fully diluted stock. His initial target was an annual growth of 4% to 8%, but MicroStrategy's data revealed in January showed a Bitcoin yield of 48% for the fourth quarter and 74.3% for the whole of 2024—numbers that, while large, are meaningless and serve as bait for his adoring followers.

Ben Werkman, a former commercial banker, consultant, and early investor in the company's Bitcoin strategy, said that trying to value MicroStrategy the old-fashioned way would drive you insane. Saylor "shut down the P&L mindset, saying, 'We're going to start from the company's net asset value and focus on leveraging our balance sheet strengths,' which in this case means acquiring more Bitcoin."

The "21/21" Plan and Bitcoin Acquisition

This is precisely what MicroStrategy is doing. In October, Saylor unveiled a plan called "21/21" to raise up to $42 billion over the next three years (half through equity financing and half through debt financing) to buy more Bitcoin. Just in November and December alone, the company acquired nearly 200,000 Bitcoins worth about $18 billion.

As long as the price of Bitcoin continues to rise, everything will go smoothly. But what if Bitcoin crashes as it has done several times before?

"Scale is everything because liquidity is everything. MicroStrategy is the most singular source of liquidity for trading Bitcoin-related risk, including both the spot market and the options market, the latter being even more important."

MicroStrategy's Financial Engineering and Imitators

Unless the end of the world truly arrives, MicroStrategy should be fine. Bitcoin would have to plummet by over 80% from its current level above $100,000 and stay there for at least two years for MicroStrategy to be unable to service its current debt. Saylor once again demonstrates his knack for exploiting capital markets and bond investor behavior.

MicroStrategy's $7 billion in debt is all unsecured, and technically, none of the Bitcoins in its treasury can be used as collateral. Moreover, with the company's current stock price at $373, its over $4 billion in debt is already "money good," or effectively equity.

"Effectively, MicroStrategy has very little debt on its balance sheet," said Jeff Park, head of alpha strategy at Bitwise, a San Francisco-based crypto asset management firm. MicroStrategy's Bitcoin holdings are unlikely to be liquidated because institutional bondholders have a high tolerance for refinancing, even in the worst-case scenario of bankruptcy.

What stops other companies from replicating Saylor's Bitcoin financial engineering? Nothing. Many have already started to follow suit. According to Park, Bitwise has counted around 90 publicly traded companies, including well-known firms like Tesla and Block, that have added Bitcoin to their balance sheets. In March this year, his firm will launch the Bitwise Bitcoin Standard Companies ETF, an index weighted by the Bitcoin holdings of 35 publicly traded companies that hold at least 1,000 Bitcoins (about $100 million). MicroStrategy will dominate this index.

Imitators are providing ammunition for MicroStrategy's detractors. Kerrisdale Capital, an investment firm based in Miami, released a short report on the stock in March, stating that MicroStrategy's stock represented a rare and unique way to get exposure to Bitcoin, but that this is no longer the case. However, Park believes that, like Netflix in the streaming space, MicroStrategy's first-mover advantage and scale set it apart.

"Scale is everything because liquidity is everything. Whether it's the spot market or the options market, they are the most liquid sources for trading Bitcoin-related risk," Park said. "MicroStrategy's options market is by far the deepest single-name options market in the world." MicroStrategy's fervent options have even given rise to a fund called YieldMax MSTR Options Income Strategy ETF, which generates income by selling call options. The one-year-old fund has a 106% annual return and has accumulated $1.9 billion in assets.

Saylor's Reflections and Vision

Sitting by the pool at Villa Vecchia, with his three parrots—Hodl, Satoshi, and Max—chattering behind him, Saylor dismissed the critics. "Traditional business wisdom over the past 40 years has been that capital is a liability and volatility is bad. The Bitcoin standard says capital is an asset and volatility is good—it's a feature," he insisted. "They live in a flat world, a pre-Copernican era. We're sitting on a train going 60 miles an hour, spinning a gyroscope with 30 tons on top, while the rest of the world stands still on the tracks."

This is not the first time Michael Saylor has flown close to the sun.

He was born in 1965 at an Air Force base in Lincoln, Nebraska, steeped in military discipline from a young age. His father, a chief master sergeant, moved the family around various Air Force bases worldwide before finally settling near Wright-Patterson in Ohio—the home of the Wright Brothers' flying school.

He entered MIT on a full Air Force ROTC scholarship to study aeronautics and astronautics, writing a thesis on computer simulations of Italian Renaissance city-states. In his spare time, he enjoyed playing guitar in a rock band and flying gliders. He graduated with highest honors in 1987 and was commissioned as an Air Force second lieutenant, but his dream of becoming a fighter pilot was shelved due to a heart murmur, which turned out to be a misdiagnosis.

When 1 + 1 = 3, by doubling down on Bitcoin investments, MicroStrategy's market cap has grown 60 times in four years, even when Bitcoin prices are down.

MicroStrategy's Founding and Early Struggles

At 24, he co-founded MicroStrategy with MIT fraternity brother Sanju Bansal. At the time, few people understood the potential of data analytics, but the company was an early entrant into the field. Riding the internet boom, the company went public in 1998, and by 2000, its market cap soared above $24 billion. Saylor's net worth peaked at nearly $14 billion, and he became a tech evangelist, prophesying a world where data would flow like water. "We're going to use our technology to eliminate the entire supply chain," Saylor told Forbes in late 1998. "We're going to go all out to win a permanent victory over the entire global industry."

Then, the company crashed. On March 10, 2000, MicroStrategy's stock price hit a peak of $313 per share, over 60 times its IPO price. Two weeks later, the company announced it needed to restate its financial performance, and the stock price plummeted to $72. The Securities and Exchange Commission charged Saylor and others with accounting fraud, and MicroStrategy later settled these charges for $11 million. Within two years, the company's stock price fell below $1. Saylor's $13 billion fortune evaporated.

"This was the darkest moment of my life. It's terrible when people lose money because they trusted you," he said.

MicroStrategy's Bitcoin Strategy

In 2020, after the government had spent trillions of dollars on COVID-19 related stimulus measures over several years, Saylor was convinced that the remaining $530 million in cash and short-term investments on MicroStrategy's balance sheet would be best invested in Bitcoin. The US government could print dollars at will—and it was doing so aggressively—but Bitcoin's design had a hard cap: the number of Bitcoins would never exceed 21 million.

If Bitcoin prices crashed, MicroStrategy's stock would fall more severely and swiftly than Bitcoin itself. But don't dismiss Saylor for being too clever. Many other companies have followed MicroStrategy's lead—the company now calls itself "the world's first and largest Bitcoin Treasury."

Metaplanet's Survival Strategy

Some publicly traded companies, like Metaplanet, have even relied on Bitcoin for survival. This Tokyo-based hotel chain faced an existential crisis during the pandemic when Japan closed its borders to tourists. The small hotel operator sold nine of its ten hotels and issued stocks and bonds to buy hotels with $70 million worth of Bitcoin. Metaplanet's stock trades on the Tokyo Stock Exchange and over-the-counter markets, rising 2,600% in 2024, and its current market cap is $1 billion, despite holding only $183 million worth of Bitcoin. The company's homepage now reads "Securing the Future with Bitcoin," barely mentioning hotels. "We are very grateful to Michael Saylor for devising a business plan for the world to follow," said Metaplanet CEO Simon Gerovich, a guest at Saylor's New Year's party.

"I've invented 20 things and worked hard to make them successful, but none of them have changed the world. Satoshi created one thing, gave it to the world, and then disappeared. It has made me more successful than any of my own ideas."