Currently, only Coinbase and MicroStrategy have reached a market capitalization of over $100 billion in the cryptocurrency industry. This may indicate that the market cap ceiling for the crypto industry has become apparent. For reference, Pfizer's market cap in the U.S. stock market is $140 billion, with quarterly profits of $4 billion; this is what I believe to be the ultimate limit even if MicroStrategy eventually surges.
Coinbase's market cap and profitability: Coinbase was once one of the most profitable exchanges in the world, with a market cap exceeding $100 billion at one point. At the time of its IPO, quarterly profits reached $3 billion.
MicroStrategy's Bitcoin holdings and financing strategy: MicroStrategy continuously raises funds through bond issuance to purchase Bitcoin and currently holds 331,200 Bitcoins, accounting for 1.5% of the total Bitcoin supply, with a holding value of $33 billion.
Guo Yu has shared that MicroStrategy's core model views long-term debt as profit on the balance sheet rather than generating cash flow. This explains well why MicroStrategy has risen so much.
Comparison of MicroStrategy and MARA's profit models: Assuming both companies raise $1.2 billion, MicroStrategy uses it to purchase Bitcoin, while MARA invests in mining rigs.
When the price of Bitcoin rises from $50,000 to $100,000, MicroStrategy makes a net profit of $1.2 billion from its investment in Bitcoin, but this is unrelated to the company's business cash flow and is considered unrealized gains. Including the Bitcoin that MicroStrategy held previously, it actually earned over $15 billion in a year.
In contrast, MARA's $1.2 billion investment in mining, although the mining costs are high, will have a payback period of one year for the mining rigs, resulting in a cash flow of $100 million per month thereafter.
Thus, for the same $1.2 billion investment, MicroStrategy's profit depends on the price of Bitcoin, while MARA's profit depends on the duration of Bitcoin's existence.
This is also the core reason why I believe that at a Bitcoin price of $100,000, funds will overflow from MicroStrategy into mining stocks; as long as the Bitcoin price remains at $100,000 and the hash rate remains unchanged, the longer the time, the higher the accumulated profits.
Therefore, for the same $1.2 billion investment, MicroStrategy's profit depends on the price of Bitcoin, while MARA's profit depends on the duration of Bitcoin's existence.
The impact of Bitcoin price on MicroStrategy: As the price of Bitcoin rises, the marginal effect of MicroStrategy purchasing Bitcoin through financing decreases. If the price of Bitcoin has already reached $100,000, refinancing $1.2 billion becomes increasingly challenging, and the potential increase in Bitcoin may only be 20%, leading to a significant reduction in profits to $240 million.
The ceiling of Bitcoin price and MicroStrategy's financing limitations: The room for Bitcoin price increases is limited, which constrains MicroStrategy's growth potential for purchasing Bitcoin through financing. As the price of Bitcoin rises, MicroStrategy's ability to finance will also be restricted, so the seemingly infinite upward spiral of the left foot stepping on the right foot also has a limit, and financing cannot continue.