If there was one astonishing phenomenon in the capital markets of 2024, it was this: everyone wanted to be the next Michael Saylor, but the vast majority failed along the way.
In the past few months, a number of so-called "Bitcoin Treasury Companies" have emerged in the US stock market. They attempted to replicate the MicroStrategy playbook: issuing bonds, buying cryptocurrencies, and driving up stock prices. However, the results were disastrous.
In a recent in-depth interview, veteran investor Andy Edstrom bluntly described this phenomenon as a "dumpster fire." Many imitators saw their stock prices plummet by 80% or even 95% from their peak, leaving countless retail investors penniless in this round of "false prosperity." Why is it that the same strategy is a legend for MicroStrategy, but a joke for others? In an era where AI narratives are crushing everything like a freight train, is Bitcoin still the best safe haven for assets? Today, we'll peel back the noise and discuss the underlying logic. Chapter 1: The essence of MicroStrategy is not "buying coins". This is a counterintuitive understanding: if you think Michael Saylor is just borrowing money like crazy to buy Bitcoin, you probably only understand the first layer. Andy Edstrom proposed an extremely insightful mental model: MicroStrategy is essentially profiting from interest rate differentials by issuing "dollar stablecoins." Let's break down this mechanism: USDT (Tether), which everyone is familiar with, is backed by US Treasury bonds and issues dollar-denominated tokens. What MicroStrategy is essentially doing is "using Bitcoin as collateral to issue yield-generating dollar tokens." The "dollar token" here corresponds in reality to its issued convertible bonds and preferred stock. Mechanism: It borrows low-cost dollars from the market (through bond/preferred stock issuance) and then converts these funds into Bitcoin. Safety Pad: To ensure the security of this system, an extremely high "over-collateralization ratio" is necessary. Andy points out that considering Bitcoin's volatility (it can drop 70-80% in a year), MicroStrategy maintains an over-collateralization ratio of approximately 5:1. This is why it is currently the only successful player. It possesses a massive stockpile of Bitcoin (worth approximately $56 billion at the time of podcast recording), allowing it to safely amplify returns through leverage. This is textbook financial engineering. In contrast, those imitators known as "DATs" (Digital Asset Reserves) are often cobbled together by teams with no prior experience managing publicly traded companies, lacking core cash flow, and unable to even submit basic SEC financial reports on time. They attempt to play the high-leverage game without a safety cushion, only to reap the consequences. "This is a world of binary oppositions: MicroStrategy is in a solitary alliance, while the other imitators are mostly a complete disaster." Chapter Two: The Fog of Valuation—Why Pay for Premiums? This leads to the biggest debate in the investment world: If I want to hold Bitcoin, why not buy spot instead of the heavily overvalued MSTR? This involves a core metric: MNAV (Market Net Asset Value). Many enthusiasts try to brainwash the market, saying that these companies deserve a 2x or even 15x MNAV premium. Andy Edstrom, with an economics background, scoffs at this. He reviewed the century-long history of closed-end funds: (Source footnote ng-version="0.0.0-PLACEHOLDER">) The typical scenario is that closed-end funds are usually traded at a discount (e.g., a 10%-20% discount), with only very rare instances of a small premium.
Exception:Only exceptionally well-managed holding companies like Berkshire Hathaway, or banks with 10x leverage, can maintain a book value premium of around 2x.
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