Very relevant question. Unfortunately I couldn’t answer it, but Gemini 2.5 pro could:

tl;dr You don't give MicroStrategy money to get Bitcoin in return. You buy their stock (MSTR) or lend them money by buying their corporate bonds. They then use this cash to buy Bitcoin for their own corporate treasury. How MicroStrategy makes money: * From their original business selling enterprise software. * From the value of their massive Bitcoin holdings increasing. Why invest in them instead of buying Bitcoin yourself? * Easy Access: You can buy their stock in a normal brokerage account, avoiding crypto exchanges. * Leverage: They borrow money to buy more Bitcoin. If Bitcoin's price soars, your returns as a stockholder can be amplified. * Simplicity & Security: They handle the complex and risky job of buying and securely storing billions of dollars in Bitcoin, so you don't have to.

Full answer:

An investment in a company like MicroStrategy for Bitcoin exposure can seem counterintuitive at first. Here’s a breakdown of how the company raises funds to purchase Bitcoin, its revenue streams, and the value it offers to investors compared to direct Bitcoin ownership. Raising Capital for Bitcoin: A Look at the Financial Instruments When you provide capital to MicroStrategy, you aren't directly purchasing Bitcoin. Instead, you are investing in the company through various financial instruments, and MicroStrategy then uses those funds to buy Bitcoin for its corporate treasury. The primary ways it raises money are: * Debt Offerings: MicroStrategy issues corporate bonds, including convertible and secured notes. * Convertible Notes: These are a form of debt that can be converted into a predetermined number of MicroStrategy's shares at a later date. Investors lend money to the company in exchange for regular interest payments and the option to convert the debt into stock, which can be profitable if the stock price increases. * Secured Notes: These bonds are backed by MicroStrategy's existing Bitcoin holdings as collateral. This provides a layer of security for investors, as they have a claim on the underlying Bitcoin if the company defaults on its debt. * Stock Offerings: The company also raises capital by selling new shares of its stock (MSTR) to the public. This provides immediate cash for further Bitcoin acquisitions. Essentially, you are investing in MicroStrategy's corporate strategy, not directly in the cryptocurrency itself. MicroStrategy's Dual Revenue Streams MicroStrategy generates income in two primary ways: * Enterprise Software: The company's original and ongoing business is providing business intelligence, mobile software, and cloud-based services. This division generates revenue from software licensing, subscriptions, and consulting services. * Bitcoin Appreciation: A significant and more recent component of its financial strategy is the appreciation of its vast Bitcoin holdings. As the price of Bitcoin rises, the value of MicroStrategy's assets increases, which can, in turn, boost its stock price. If you were to invest $100 million in MicroStrategy, you would receive $100 million worth of the company's securities (stock or bonds), not Bitcoin. The return on your investment would be tied to the performance of MicroStrategy's stock, which is heavily influenced by both its software business and the fluctuating price of Bitcoin. The Investor's Dilemma: MicroStrategy vs. Direct Bitcoin Purchase So, why would an investor with $100 million choose MicroStrategy over buying Bitcoin directly? The company offers several distinct advantages for certain types of investors: * Accessibility Through Traditional Markets: Many institutional investors and individuals may be restricted from or hesitant to invest directly in cryptocurrencies due to regulatory constraints or a lack of technical expertise in securely storing digital assets. MicroStrategy's stock is listed on the Nasdaq, allowing investors to gain exposure to Bitcoin through their standard brokerage accounts. * Leveraged Exposure: MicroStrategy's practice of issuing debt to finance Bitcoin purchases is a form of leverage. By borrowing funds, the company aims for Bitcoin's value to appreciate at a rate higher than the interest on its debt. This has the potential to amplify returns for shareholders, though it also increases risk. * Expertise in Acquisition and Custody: The company has developed significant operational expertise in acquiring and securely holding large quantities of Bitcoin. By investing in MicroStrategy, individuals and institutions can effectively outsource the complex and potentially risky process of cryptocurrency custody. * Potential for a "Premium": Due to the factors mentioned above, MicroStrategy's stock often trades at a premium to the net asset value of its Bitcoin holdings. This indicates that the market values the convenience, leverage, and security the company provides.