Currently, only Coinbase and MicroStrategy have reached a market value of $100 billion in the cryptocurrency industry. This may indicate that the market value ceiling of the crypto industry has become apparent. For reference, Pfizer's market value in the U.S. stock market is $140 billion, with quarterly profits of $4 billion, which I believe is the ultimate height that MicroStrategy could reach even if it skyrockets.
Coinbase's market value and profitability: Coinbase was once one of the most profitable exchanges in the world, with a market value exceeding $100 billion at one point. At the time of its IPO, quarterly profits reached as high as $3 billion.
MicroStrategy's Bitcoin holdings and financing strategy: MicroStrategy continuously issues bonds to finance the purchase of Bitcoin, currently holding 331,200 Bitcoins, which is 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 profits on the balance sheet rather than generating cash flow. This explains well why MicroStrategy has appreciated so much.
Comparison of the profitability models of MicroStrategy and MARA: Assume both companies finance $1.2 billion, with MicroStrategy using it to purchase Bitcoin and MARA investing it in mining machines.
When Bitcoin prices rise from $50,000 to $100,000, MicroStrategy earns a net profit of $1.2 billion from investing in Bitcoin, but this is unrelated to the company's business cash flow and represents unrealized gains. Including the Bitcoin previously held by MicroStrategy, the actual earnings in a year exceeded $15 billion.
In comparison, MARA's $1.2 billion investment in mining has high costs, but over time, the payback period for mining machines is one year, resulting in a monthly cash flow of $100 million thereafter.
Thus, for the same $1.2 billion investment, MicroStrategy's profitability depends on the price of Bitcoin, while MARA's profitability depends on the duration of Bitcoin's price.
This is also the core reason I believe that when Bitcoin reaches $100,000, funds will flow from MicroStrategy to mining stocks; as long as the Bitcoin price remains at $100,000 and the hash rate remains unchanged, the accumulated profits will only grow over time.
Thus, for the same $1.2 billion investment, MicroStrategy's profitability depends on the price of Bitcoin, while MARA's profitability depends on the duration of Bitcoin's price.
The impact of Bitcoin price on MicroStrategy: As Bitcoin prices rise, the marginal effect of MicroStrategy's financing to purchase Bitcoin decreases. If the Bitcoin price has already reached $100,000, refinancing $1.2 billion for MicroStrategy becomes increasingly difficult, and the potential increase in Bitcoin may only be 20%, significantly reducing profits to $240 million.
Bitcoin price ceiling and MicroStrategy's financing limitations: The potential for Bitcoin price increases is limited, which restricts MicroStrategy's growth potential through financing to purchase Bitcoin. As Bitcoin prices rise, MicroStrategy's financing capabilities will also be constrained, so the seemingly endless upward momentum is capped, and financing will no longer be possible.
