Understanding MSTR: Why Buy Strategy Stock Instead of Bitcoin?
Strategy (MSTR) is the world’s largest Bitcoin treasury company in the world with over 800k+ Bitcoin on its balance sheet. The company was founded by Michael Saylor and adopted the Bitcoin standard on August 10th 2020.
When I first bought MSTR stock in January 2021, I simply wanted exposure to Bitcoin in my Fidelity account. There were no Bitcoin ETFs at the time. The only other alternative was the Grayscale Bitcoin Trust (GBTC) or simply purchasing spot Bitcoin over an exchange such as Coinbase.
Investors now have a ton of options when it comes to buying/investing in Bitcoin. Many of you reading this are probably wondering the same question:
Why Buy Strategy Stock Instead of Bitcoin?
In this article, I will help beginners understand why investors HODL MSTR stock and give you an honest comparison of both the pros and cons of holding MSTR stock versus buying spot Bitcoin outright.
Why does Strategy buy Bitcoin?
Michael Saylor bought Bitcoin on August 10 2020 as a way to save his struggling software company and protect MicroStrategy’s balance sheet from fiat inflation.
Strategy’s long term goal is to maintain the largest cash reserve on Wall Street only behind Warren Buffett’s Berkshire Hathaway. As of writing this article, Strategy sits at #2 largest cash pile ahead of several Mag 7 companies.
Bitcoin is revolutionary 21st century software that allows individuals to send money anywhere in the world without 3rd party or government intervention.
You can also view Bitcoin as “digital capital” that can be used to issue preferred dividends as long as BTC goes up over time (more on that later).
Why buy MSTR instead of BTC?
I personally hold both MSTR and BTC as a long term investor. There are several important reasons to buy MSTR instead of BTC:
- BTC Outperformance: MSTR shares have outperformed BTC since August 10th 2020. Many investors want to grow their money faster over time by investing in a Bitcoin treasury companies that increased BTC per share over time
- Access to MSTR Options Market: Several of my clients make thousands of dollars every week selling MSTR covered calls and MSTR cash secured puts. You cannot easily trade options on BTC unless you deposit your coins into a derivative platform and take on extra risk
- Zero Custody Risk: Bitcoin wallets get hacked often and add an extra layer of risk for investors. On the other hand, MSTR can be comfortably purchased within your brokerage account.
- Increased BTC Holdings Over Time: Strategy aims to increase BTC per share over time. Every MSTR share contains a certain amount of BTC so investors hope to control more BTC without investing additional funds.
How does MSTR create BTC per share?
Michael Saylor and Phong Le create BTC per share by selling MSTR common stock and STRC preferred shares to buy spot Bitcoin. The goal is to increase the company’s Bitcoin stack faster than the company’s diluted common shareholders.
Does issuing shares dilute shareholders?
Yes. Strategy’s outstanding share count has increased nearly 4x since Michael Saylor started buying Bitcoin in 2020. However, MSTR dilution is greatly different from most companies because Bitcoin is a long term appreciating asset.
As long as Bitcoin goes up over time, MSTR dilution is accretive to shareholders and helps the company earn more net profit in the future.
Think of it like this: If Strategy has 840k BTC on its balance sheet then MSTR generates $840 million profit for every $1,000 Bitcoin gains in price.
Other fiat companies dilute shareholders and destroy shareholder value over time. MSTR is the opposite and creates shareholder value by letting the balance sheet do the heavy lifting.
MSTR’s leverage and capital markets strategy
Right now, MSTR net leverage is at zero since the company has around the same amount of cash vs debt on its balance sheet.
What’s interesting is how STRC will determine the trajectory of the company in the future. Michael Saylor used ChatGPT in 2025 to Stretch (STRC), a Bitcoin back preferred stock that pays a 12% biweekly dividend.
When STRC hits above par ($100), the company sells STRC shares to buy more Bitcoin. Strategy CEO Phong Le has mentioned several times that STRC is the company’s main focus right now due its ability to create a comfortable retirement for 1 billion people.
The risks of owning MSTR vs. Bitcoin
| Risk | MSTR | Bitcoin (BTC) |
|---|---|---|
| Price volatility | Very high; MSTR can move more than BTC in either direction | Very high |
| Bitcoin price decline | Major risk because MSTR’s value is heavily tied to Bitcoin | Directly exposed |
| Leverage | Can amplify both gains and losses | No corporate leverage |
| Share dilution | Strategy can issue new shares to raise capital | No dilution of your BTC holdings |
| Debt & preferred securities | Strategy has debt and preferred securities that create financial obligations | No corporate debt |
| Premium/discount to BTC | MSTR can trade above or below the value of its Bitcoin holdings | BTC itself has no corporate NAV premium |
| Capital markets risk | Strategy depends on access to debt, preferred-stock and equity markets | No dependence on capital markets |
| Company-specific risk | Management, financing decisions, regulations, and corporate structure can affect returns | No company or management risk |
| Custody risk | Strategy holds Bitcoin through its corporate structure | You control custody if you hold BTC directly |
| Potential upside | Can potentially outperform BTC because of leverage and capital markets strategy | More directly reflects Bitcoin’s performance |
