I. MicroStrategy Bitcoin strategy: Financial innovation and market impact
In the legendary stories of Wall Street, MicroStrategy's strategic transformation into Bitcoin is undoubtedly a significant highlight. In 2020, the COVID-19 pandemic triggered a global liquidity crisis, and loose monetary policies in various countries exacerbated currency depreciation and inflation risks. Against this backdrop, Michael Saylor reassessed Bitcoin's value and chose a Bitcoin strategy for MicroStrategy.
Compared to companies like BlackRock with BTC ETFs or Spot Bitcoin ETPs, MicroStrategy's strategy is more aggressive. It purchases Bitcoin through various financing methods, including its own funds, issuing convertible bonds, and share issuances, bearing the potential upside of Bitcoin while also assuming downside risks.
MicroStrategy primarily raises funds to purchase Bitcoin through four main avenues: using its own funds, which was the case for several early investments; issuing convertible preferred bonds, which investors favor due to the bonds' downside protection and potential returns; issuing preferred secured bonds, although MicroStrategy has repaid these bonds early; and market-priced stock issuance, which is flexible and has no repayment pressure but dilutes existing shareholder equity, leading to complex market reactions.
As of December 30, 2024, MicroStrategy has invested approximately $27.7 billion in total, purchasing 444,262 Bitcoins with an average holding price of $62,257 per Bitcoin.
There are many controversies in the market regarding MicroStrategy's strategy of purchasing Bitcoin with 'intelligent leverage':
Leverage risk: From the data, MicroStrategy's debt-equity ratio is within a healthy range, and the risk is not high compared to leading U.S. publicly traded companies.
Convertible bond risk: If MicroStrategy does not continue to issue convertible bonds in the future, Bitcoin would need to fall below $16,364 for the value of its Bitcoin holdings to be lower than the total amount of convertible bonds. Even in the face of repayment obligations, MicroStrategy has various options to respond, and the likelihood of falling into 'insolvency' is low.
Bitcoin per share: The amount of Bitcoin per share determines the net asset value per share of MSTR. MicroStrategy increases its Bitcoin reserves through equity dilution financing; as long as there is a market value premium, it still holds value for shareholders.
Recent aggressive buying reasons: This may be due to the high price increase of MSTR stock during the bull market. MicroStrategy proposed the '42B Plan', which may increase Bitcoin holdings through share issuance financing in the future, enhancing the amount of Bitcoin per share.
Bitcoin upward momentum: In addition to MicroStrategy, the upward momentum of Bitcoin also includes long-term holders with strong consensus on Bitcoin, traditional financial incremental funds brought by ETFs, other publicly traded companies following MicroStrategy, and potential national strategic reserves.
MicroStrategy's Bitcoin strategy is a bold attempt at corporate transformation and financial innovation, pushing Bitcoin into the traditional financial spotlight and breaking down barriers between crypto assets and mainstream capital markets.
II. Artificial Intelligence: Era Transformation and Development Challenges
Artificial intelligence is the decisive technology of our era, breaking the internet in 2023 and impacting financial markets in 2024. The market is extremely fascinated by its prospects. Unlike previous waves of computing, artificial intelligence requires substantial physical infrastructure, driving a surge in capital expenditure, and can create immense wealth like a general-purpose technology, affecting many industries.
However, the artificial intelligence industry also faces numerous issues:
Pre-training bottleneck: Cracks appear in the scaling law; pre-training requires vast amounts of electricity and data, both of which face challenges. Although some laboratories attempt to resolve this by locking in nuclear power, burning natural gas, acquiring media data, synthesizing data, etc., pre-training seems to have entered a stagnant state.
Test time calculation: OpenAI's o1 model uses test time calculation technology, allowing the model to 'think', opening up new dimensions for expansion and potentially being the biggest breakthrough of 2024; this field is worth keeping an eye on.
Reasoning issues: Current models lack sufficient reasoning ability; the o1 model shows certain reasoning capabilities, but whether it can completely resolve reasoning issues remains to be seen. Meanwhile, Nous Research's proposed 'hunger' research direction also provides new ideas for reasoning development.
International competition: The United States dominates the field of artificial intelligence and is actively regulating, while other countries are relatively slow to recognize this, but more countries are expected to participate in the competition in the future.
Next breakthrough: The o1 model brings new possibilities for technological development, and the open-source community also has the potential to trigger breakthroughs. However, Zuckerberg's attitude towards open-source is crucial, and the field of agency is also a future research direction likely to make progress.
Despite the challenges faced in the development of artificial intelligence, the R&D of leading laboratories and government funding investments keep its prospects bright.
III. Ethereum upgrades: Important improvements in 2025
Ethereum made significant progress through the Dencun upgrade in 2024, and there are several noteworthy upgrade contents in 2025:
EIP - 3074: Highly anticipated in the Pectra upgrade, it introduces new operation codes to achieve practical functions such as transaction batching, sponsored transactions, conditional transactions, meta-transactions, and secure delegation, enhancing user experience and marking an important step in the development of Ethereum's account model.
EIP - 7251: Allows validators to earn additional staking rewards beyond the standard 32 ETH pledge, attracting large institutions to participate, and may also enhance the operational speed of the Ethereum network.
EIP - 7002: Addresses operational risk issues for validator nodes, allowing stakers to withdraw ETH simply by extracting keys, reducing the risks of malicious withholding and key leakage.
ERC - 7683: A token standard aimed at solving cross-chain interoperability issues, bringing unified standards to the Ethereum ecosystem, achieving interoperability, and eliminating fragmentation.
ERC - 7841: Proposes a low-level message format and API, abstracting out chain-specific logic, allowing applications to be deployed across chains and compatible with various messaging protocols, promoting interoperability development.
These upgrades will further optimize Ethereum's performance and functionality, driving the development of its ecosystem.
The cryptocurrency market is constantly changing, and MicroStrategy's Bitcoin strategy, the development of artificial intelligence, and Ethereum's upgrades all bring new opportunities and challenges to the market that are worth ongoing attention.