Author: Heart of Computing Power

Recently, MicroStrategy (Strategy) released its Q4 2025 financial report, which once again caused an uproar on Wall Street.

If you only look at the books, the data is truly shocking:

The company reported a net loss of $12.4 billion in the quarter, or $42.93 per share.

In the same period last year, their net loss was only $670.8 million, meaning the loss has increased by more than 18 times year-on-year.

But behind this alarming facade lies founder Michael Saylor's "Bitcoin Treasury Strategy".

However, the real risks of this strategy are far more deadly than outsiders imagine.

1. The 710,000 Bitcoins were all created through money in the secondary market.

First, we need to clarify a key misconception: 99% of the 12.4 billion yuan loss is a "paper loss".

The reason is simple: Strategy Inc. (formerly MicroStrategy) uses fair value accounting standards, meaning that every penny fluctuation in the price of Bitcoin must be reflected in its financial statements.

At the end of 2025, Bitcoin crashed, falling below Strategy's average holding cost line, automatically creating this huge hole in the account.

However, this loss did not involve any actual cash outflow from the company, nor does it mean that they actually cut their losses and left the market.

Therefore, when analyzing Strategy, one should not only focus on earnings per share; the truly crucial data lies within its portfolio structure.

As of early February 2026, Strategy held a total of 713,500 Bitcoins, with an average purchase price of approximately $76,000 per Bitcoin. Based on the market price at the time, the company was at a paper loss.

There is another number here that is easily misinterpreted.

Previously, it was rumored in the market that Strategy achieved a "22.8% Bitcoin return" in 2025. This figure is true, but it does not mean that Bitcoin rose by 22.8%.

This 22.8% is an indicator created by Strategy itself, called "Bitcoin Yield," which means that the number of Bitcoins behind each share of Strategy stock has increased by 22.8% since the beginning of the year.

Although the price of Bitcoin corrected by about 30% from its peak in 2025, the company continued to raise funds to buy more Bitcoin, at a rate that was faster than the stock was diluted, so the "crypto content" per share actually increased.

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

In January 2026 alone, Strategy bucked the trend and added another 41,000 tokens to its portfolio.

He didn't care how bad the financial report was; his only goal was to hoard Bitcoin to the limit.

The only prerequisite for him to do this is that the secondary market is willing to continue to give him money.

The problem lies precisely here: is this financing machine really as stable as outsiders say?

II. Cracks in the Financing Mechanism

The most controversial aspect in the market is Strategy's almost insane fundraising ability.

In 2025, the company raised approximately $25.3 billion through methods such as issuing new shares and preferred stock, almost all of which was used to buy Bitcoin.

In the convertible bond market alone, Strategy accounts for 30% of all issuances in the United States.

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

However, this is contingent on the stock price not falling too drastically.

If the stock price falls more than the Bitcoin price rises, issuing new coins to buy more cryptocurrency becomes a losing proposition of "raising funds at a high price and buying assets at a low price."

In reality, Strategy's stock price has fallen by more than 70% from its 2024 high, and the company's market value was once lower than the total value of the Bitcoin it holds.

In other words, the market felt that the company would be more valuable if it simply distributed the coins directly.

At this point, every additional new share issued is simply diluting the interests of existing shareholders.

The more hidden risks lie within the balance sheet.

On paper, the company has $2.3 billion in cash and annual convertible bond interest expenses of only $34 million, which looks very safe.

But most people overlook two things:

First, the company has $8.2 billion in convertible debt, which must be repaid or converted into stock upon maturity.

Secondly, its issued preferred stock pays a cash dividend of approximately 10% to 12.5% annually.

These two sums combined amount to far more than just 34 million in interest.

If cryptocurrency prices remain low, equity financing will become increasingly difficult, because the lower the share price, the more losses there will be in issuing new shares, and the less willing people will be to buy them.

At that point, you'll either have to borrow new money at a higher cost to pay off old debts, or you'll have to resort to selling your cryptocurrency to pay off your debts.

Strategy is currently on a frantic strategy of leveraging up to buy more chips while keeping some coins in their pocket in case they get liquidated tomorrow.

It operates on the edge of a knife, maintaining an extreme balance. As long as the financing window in the capital market remains open, it can continue to function.

Conversely, if the window narrows, the chain may break.

III. Stripping Away the "Bitcoin Bank" Appearance

Today's Strategy can no longer be measured by the standards of traditional software companies.

If someone tries to package it as a "Bitcoin Trust" or a sophisticated "digital central bank," that's absolutely a misrepresentation.

When broken down, its core operating logic is frighteningly simple: as long as it can raise money by printing stocks and issuing bonds, it will use this money to buy Bitcoin in a one-way cycle.

Only when the growth rate of its "currency content per share" is large enough to cover the double losses of stock price decline and equity dilution will the original shareholders not lose money.

Unfortunately, the market performance in 2025 completely exposed the flaws of this logic:

Its core software business has long been on the verge of collapse, with revenue of only about $500 million in 2025. The money it earns is not even enough to pay the annual interest. It has completely lost its ability to continue operating and has become a "shadow target" of Bitcoin.

Credit ratings are not what the market claims.

Strategy is indeed the world's first Bitcoin treasury company to receive a credit rating, but it is rated as junk (non-investment grade).

Rating agencies have explicitly listed "Bitcoin price volatility" as its number one risk and given it a long-term negative outlook.

The mainstream financial world has not endorsed it; it has merely labeled its high-risk model with a prominent warning.

Many people called Thaler a madman.

After all, the 2025 financial report they just released is riddled with problems.

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

Analysts revealed: "Theller is not concerned about short-term price fluctuations at all; he is betting on the future consensus of digital assets."

He turned the company into a huge leverage tool for this bet.

His methods were extremely shrewd:

By continuously issuing convertible bonds and issuing new shares, he successfully obtained funds for large-scale asset purchases, while cleverly distributing the potential cash flow pressure to the entire capital market.

If the bet is successful, shareholders can enjoy a premium far exceeding the increase in the value of the assets themselves;

If they lose, as the largest shareholder, his wealth will shrink significantly along with that of the investors.

The operation is sophisticated, but the fuse of the death spiral (high dividend obligations, equity dilution, and arbitrage short selling) has already been embedded in the capital structure.

The $2.3 billion in cash reserves at the beginning of 2026 is a temporary safety net, but not a permanent get-out-of-jail-free card.

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