Author: Heart of Computing Power

Recently, MicroStrategy released its Q4 2025 financial report, which once again caused a stir on Wall Street.

If you only focus on the numbers, the data is quite shocking:

A net loss of $12.4 billion in a single quarter, equating to a loss of $42.93 per share.

In the same period last year, their net loss was only $670.8 million, with the loss magnitude expanding by more than 18 times year-on-year.

However, behind this frightening appearance lies the "Bitcoin Treasury Strategy" of founder Michael Saylor.

Nevertheless, the actual risks of this strategy are far deadlier than the outside world imagines.

1. 710,000 Bitcoins, all piled up using money from the secondary market

First, it's important to clarify a key misconception: 99% of the $12.4 billion loss is "paper loss."

The reason is simple: MicroStrategy (formerly MicroStrategy Inc.) uses fair value accounting standards, meaning that every time the price of Bitcoin fluctuates, the financial report must reflect it.

When Bitcoin plummeted at the end of 2025, falling below MicroStrategy's average holding cost, a massive hole appeared on paper.

However, this loss did not involve any real cash leaving the company, nor does it mean they are actually selling off their holdings.

Therefore, when assessing MicroStrategy, one cannot merely look at earnings per share; the truly critical data lies within its holding structure.

As of early February 2026, MicroStrategy held a total of 713,500 Bitcoins, with an average purchase price of around $76,000 per coin, resulting in an overall unrealized loss based on market price at that time.

There is also a potentially misleading number here.

It had been circulating in the market that MicroStrategy achieved a "22.8% Bitcoin yield" in 2025; this number is true, but it does not mean the price of Bitcoin rose by 22.8%.

The 22.8% is an indicator created by MicroStrategy called "Bitcoin Yield," meaning that the number of Bitcoins corresponding to each share of MicroStrategy's stock increased by 22.8% compared to the beginning of the year.

Although Bitcoin's price corrected approximately 30% from its peak in 2025, the company continually raised funds to buy Bitcoins, at a pace faster than the dilution caused by the issuing of new shares, thereby increasing the "Bitcoin content" per share.

This is precisely Saylor's core strategy: the lower the coin price falls, the more he buys.

In just January 2026, MicroStrategy increased its holdings by another 41,000 coins regardless of the market trends.

No matter how awful the financial report looks, he doesn't care; the only goal is to hoard Bitcoin to the limit.

The only premise that allows him to play this game is that the secondary market is willing to keep providing him with money.

And therein lies the problem: Is this financing machine really as stable as the outside world asserts?

2. Cracks in the Financing Machine

The biggest controversy in the market is MicroStrategy's nearly insane ability to raise funds.

In 2025, the company raised approximately $25.3 billion through methods like stock issuance and preferred stock, almost all of which went to buy Bitcoins.

In the convertible bond market, MicroStrategy alone accounted for 30% of the total issuance in the U.S.

The essence of this operation is simple: continuously dilute the equity of existing shareholders in exchange for more Bitcoins.

However, this has one prerequisite: the stock price cannot fall too sharply.

If the stock price declines more than the increase in Bitcoin price, issuing new shares to buy coins becomes a losing business of "financing at high prices and buying assets at low prices."

The reality is that MicroStrategy's stock price has dropped over 70% from its 2024 peak, and the company's market value has at one time fallen below the total value of the Bitcoins it holds.

In other words, the market thinks this company is not even worth more than directly distributing the coins.

At this point, for every new share issued, it purely dilutes the interests of existing shareholders.

Moreover, a more hidden risk lies within the balance sheet.

On the books, the company has $2.3 billion in cash, with annual convertible bond interest expenditures of only $34 million, which seems very safe.

However, most people overlook two things:

First, the company carries $8.2 billion in convertible debt, which must be repaid in cash or converted into stock when due;

Second, it has issued preferred stock, requiring annual cash dividends of about 10% to 12.5%.

These two amounts combined are far more burdensome than the $34 million in interest.

Once the price of Bitcoin remains low, the path of equity financing will become narrower and narrower, as the lower the stock price, the more costly new share issuances become and the less willing people are to buy.

At that time, either new debt must be borrowed at a higher cost to repay the old debt, or the company will have to resort to the last resort of selling coins to pay off its debts.

Currently, MicroStrategy is desperately increasing leverage to buy chips while keeping some coins in hand to prevent potential liquidation at any moment.

It is walking a tightrope of extreme balance; as long as the financing window in the capital market remains open, it can keep operating.

Conversely, if the window begins to narrow, the chain may break.

3. Peeling Away the "Bitcoin Bank" Exterior

MicroStrategy now can no longer be measured by traditional software company standards.

If someone packages it as a "Bitcoin trust" or a high-end "digital central bank," that would definitely be a confusion of concepts.

Breaking it down, its core operational logic is frighteningly simple: as long as it can raise money through stock printing and bond issuance, it will unidirectionally circulate to buy Bitcoin.

Only when the growth of its "Bitcoin content per share" is large enough to cover the dual losses from falling stock prices and equity dilution, will existing shareholders not lose money.

Unfortunately, the market performance of 2025 has completely exposed the shortcomings of this logic:

Its core software business has long been half-alive, with revenues of only about $500 million in 2025, and the profits generated are insufficient to cover annual interest payments, leading to a complete loss of sustainable operating capability and reducing it to a "shadow target" of Bitcoin.

The credit rating is not what the market hypes it to be.

MicroStrategy is indeed the world's first Bitcoin treasury company to obtain a credit rating, but the rating is junk (non-investment grade).

The rating agency explicitly listed "Bitcoin price volatility" as its number one risk, along with a long-term negative outlook.

The mainstream financial world has not recognized it; it simply affixed a prominent warning label to its high-risk model.

Many people criticize Saylor as a madman.

After all, the financial report just submitted for 2025 is full of red flags.

But if you carefully dissect this financial report, you will find that his logic is actually very clear.

Analysts reveal: "Saylor doesn't care about short-term price fluctuations; he is betting on the future consensus of digital assets."

For this bet, he has turned the company into a massive leverage tool.

His operational methods are extremely clever:

By continuously issuing convertible bonds and new shares, he has successfully obtained the funds to make large-scale asset purchases, while cleverly distributing the potential pressure on the capital chain across the entire capital market.

If he wins the bet, shareholders can enjoy a premium far exceeding the increase in the assets themselves;

If he loses, as the largest shareholder, his wealth will also shrink drastically along with the investors.

However, while the operation is meticulous, the fuse of the death spiral (high dividend obligations, equity dilution, and arbitrage shorting) is also embedded in the capital structure.

The $2.3 billion cash reserve at the beginning of 2026 is merely his temporary cushion, not an eternal get-out-of-jail-free card.

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