Betting With Imaginary Math Bucks

Lest you believe that our ire extends merely to the AI industry, allow us to report on a most curious story that is not AI related: that of Strategy, a.k.a. MicroStrategy, a company whose entire valuation and business model is now tied to the price of Bitcoin.

A little history, to begin with.

MicroStrategy was founded in 1989 by Michael Saylor, yet another white male product of the late nineties who, in our opinion, has not had a single good idea since his company precipitated the bursting of the dot-com bubble in 2000. (We may give him partial credit for somewhat putting his money where his mouth is in his pursuit of Bitcoin, but he is on thin ice.)

His original company was an entirely normal business-to-business operation that provided data analysis services. It was quite successful, in spite of fraud, tax evasion, and the usual gray-area business activity that any normal person would consider misleading at best and immoral at worst. It eventually made Michael Saylor a billionaire, but of course this is not the most interesting part of the company’s story. The original business is still doing well but somewhat drifting into irrelevancy since 2020, when Saylor made his first big move into acquiring Bitcoin.

We must assume that you are all familiar with cryptocurrency. There is simply not enough space here to go through the entire saga that is the invention of digital pseudo-cash after the global financial crisis of 2008. In short, in case you are not aware: Bitcoin is the original and still the most popular cryptocurrency, and is worth (in theory) thousands of USD. Saylor is a believer in the merit and value of Bitcoin, and so he has bet his company and to some extent his own fortunes on it.

The gamble is a somewhat simple one. Saylor believed that there was no good use of the company’s cash reserves that were not liable to being wiped out by inflation. It is worth noting that interest rates circa 2020 were approaching rock-bottom; normally safe investments for free cash, such as government bonds, paid almost nothing. In this environment, there is some logic to looking at more risky investments with a much greater return. (Not common sense, mind you, but we will allow that there is a train of reasoning going on here somewhere, even though said train may actually be made out of Lego bricks.) Now, Bitcoin itself was created to be deflationary and it will, in theory, only rise in value as fewer and fewer coins are made available over time. Saylor is ostensibly a tech guy, and the siren song of ever-increasing numbers seduced him completely.

Under his guidance, MicroStrategy began to use its cash reserves to acquire Bitcoin. As it bought more and more coins, the publicly traded company’s stock began to be used as a stand-in for Bitcoin itself; crypto was somewhat difficult to trade, initially, but MicroStrategy’s stock was much more easily accessible. (This is not true today, as there are multiple exchange traded funds which include Bitcoin.) The stock price began to rise rapidly, and the lure of bigger numbers was catnip to the C-suite.

When the company had no more free cash to spend on Bitcoin, it began to sell more and different types of stock in order to raise the funds to continue its spending spree. This resulted in quite the list of equity offerings:

• MSTR - the common stock, from which the investor gains exposure to Bitcoin
• STRC - Stretch; short-term perpetual preferred stock, which returns a variable dividend every year
• STRD - Stride; long-term perpetual preferred stock, which returns a set dividend of 10% per year
• STRK - Strike; convertible perpetual preferred stock; it pays a yearly dividend of 8% and can be converted into the common stock
• STRF - Strife; senior perpetual preferred stock which pays a yearly dividend of 10% and offers governance rights and penalties for missed dividends

It also began to sell corporate bonds, initially backed by its software business, in order to buy more Bitcoin. At the time of writing, the company still has circa USD$6 billion in convertible bonds, the earliest of which will mature in 2028. These bonds may either convert into shares of regular stock, or back into the initial value of the bond, as the bondholder prefers; if the current share price is below the share price promised by the bond (the strike price), then the bondholder will inevitably take back their money rather than take an asset that has lost value.

If all of this sounds confusing and makes your head hurt, then rest assured you are not alone. We wrote it out, and now we require coffee and painkillers.

……

Right then.

Saylor effectively believes that he has lucked into a method to generate limitless money. Again, if we grant that there is at least some kind of logic going on here and not, say, a fever dream brought on by an unholy fusion of spreadsheets and narcotics, it’s possible to see why he thinks this. Bitcoin is deflationary, therefore the price must increase. If the price increases, then their digital treasure trove becomes more valuable every year without them having to do anything, and the value of the company increases. If the value of the company increases, then they can continue to issue more stocks and convertible bonds ad infinitum. By issuing more stocks and bonds, they can buy more Bitcoin. And so the cycle continues, with the stocks being bought and sold as a kind of convenient bet about the price of Bitcoin and the sentiment of cryptocurrency in general. (Do not ask us about the stock premium or mNAV. We do not have enough enthusiasm for further inquiry into this numerical nonsense.)

MicroStrategy (or Strategy, its current name) is now in a rather strange position. It benefitted from being the first to attempt the infinite money glitch, and it is now beholden entirely to the cycle in order to survive. But what if the number does not go up? This, dear readers, was the first thought that came to mind when we began our research into this topic. Number does not, in fact, always go up. Number sometimes go down. Would number go down? What happens then?

Bitcoin-holding companies like Strategy are beholden to the price of Bitcoin itself, an asset that is entirely held up by idiots playing psychological games with themselves and each other. It is fundamentally imaginary, existing only as electrical impulses and clever computer code; there is absolutely nothing of value above that, not even on a creative level. It’s possible to spin up an identical copy of Bitcoin at any time, and the only difference between that and the imaginary math bucks being valued at $X thousands of USD is the fact that many silly people think that those specific imaginary math bucks will someday be worth $X + 1 thousands of USD.

To be clear: there is nothing special about those imaginary math bucks apart from belief. The underlying technology is somewhat interesting but not especially useful, being one implementation of a distributed, write-once ledger. (It’s especially galling, by the way, that digital fool’s gold is now what everyone thinks of when someone says the word “crypto”, because actual cryptography is some of the most interesting and essential technology in existence.)

There has always been a huge and fundamental disconnect between the price of crypto and its actual value, and not even Strategy can escape that. Michael Saylor bet his company and fortune on a myth, a story told initially by libertarian cyberpunk anarchists which was then co-opted by Big Finance to enrich the usual suspects of their world. Bitcoin, on a very basic level, is nothing but the faith, and most importantly interest, of the people who bought into it. Today the interest is waning.

In October 2025, Bitcoin reached its high of about USD$120,000 per coin. By November, however, the price began to decline, and it has now slipped into a steady downward trend to reach its current price, as of June 2026, of about USD$60,000 per coin. Bitcoin ETFs have suffered immense outflows of capital, losing USD$4.4 billion since the start of the month. There are fewer true believers, fewer hodlers, fewer people who are invested in the original mission of Bitcoin to replace fiat currency. It is yesterday’s news, and the new religion is that of artificial intelligence.

So what now?

For Strategy and Michael Saylor, we suspect they will face a doom spiral. They face some heavy debts due to their issuance of dividend-paying stocks, to the tune of about USD$1.5 billion per year currently. Their bonds are all “out of the money”, meaning that their stock price is below the bond strike price, and the bondholders will inevitably choose to take back their cash to the tune of billions of dollars beginning in 2028. If they issue even more equity to raise money to buy more Bitcoin, the debt will eventually crush them, and Strategy will sail off into bankruptcy.

The most informative YouTube channel Broken Business Models has an excellent video on the precarious position of Strategy. We thank them very much for capturing our interest on this subject. Rest assured, dear readers, we will continue to observe the proceedings, if only to see Michael Saylor’s face when he goes broke from gambling on digital pixie dust.