MicroStrategy Convertibles

Issuance Dynamics

When MicroStrategy issues a convertible note:

  1. Set a Premium: Conversion price above the current stock price
  2. Offer Low Interest: Because the option upside is attractive to investors, they accept lower (or no) interest
  3. Deploy Proceeds: MicroStrategy uses the newly raised capital to buy BTC, which in theory drives the company's perceived value higher

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Volatility Flywheel

  • If Bitcoin's price rises, MicroStrategy's treasury value grows – pushing its stock price up
  • As the stock price appreciates, the embedded call option in the convertible becomes more valuable, reinforcing demand for the notes
  • Allows for further convertible issuance at more favorable rates – fueling more Bitcoin accumulation

This feedback loop has turned MicroStrategy from a business intelligence company into a leveraged Bitcoin investment vehicle.

Key Takeaway

Onchain Transparency

Where MicroStrategy’s convertible deals unfold behind closed doors (and eventually in SEC filings), MegaStrategy’s positions, risks, and treasury composition are publicly verifiable onchain. This transparency allows participants and governance token holders to evaluate real-time market risk, protocol health, and future issuance decisions.