Michael Saylor, founder and chairman MicroStrategy (MSTR 25.73%)arguably one of the greatest Bitcoin (BTC 5.56%) bulls on the planet. Since he began aggressively acquiring the company Bitcoin In August 2020, he predicted that the Bitcoin price had nowhere to go but up. He now thinks Bitcoin could reach a price of $13 million by 2045.

At the end of October, he delivered more welcome news to Bitcoin investors: the launch of a spectacular $42 billion Bitcoin purchasing plan over the next three years. This is roughly equivalent to 3% of all Bitcoin in circulation and could lead to a massive Bitcoin rally in the coming years.

Plan to buy $42 billion worth of Bitcoin

In a call with analysts, MicroStrategy said the next step in what it calls the “21/21 Plan” is to raise $42 billion and then use it to buy more Bitcoin. Half of the funding, $21 billion, will come from the offering of new shares in the company. The remaining $21 billion will come from new fixed income offerings. convertible debt.

To put this plan in perspective, MicroStrategy currently has 252,200 Bitcoins on its balance sheet; this is worth more than $21 billion at today’s prices. So the plan is to double the company’s existing Bitcoin holdings. MicroStrategy already has the largest Bitcoin holdings of any company in the world. In fact, MicroStrategy currently owns more Bitcoin than the US or Chinese governments.

Image source: Getty Images.

To call a $42 billion buying spree aggressive is an understatement. But according to Saylor, we’re already in the middle of a decade-long Bitcoin “gold rush,” and Saylor is determined to transform his enterprise software company into what he now calls the “Bitcoin Treasury Company,” or BTC. Here’s a way to take advantage of it.

Will other companies follow MicroStrategy’s lead?

Already, a handful of companies have shown interest in following MicroStrategy. For example, Semler Scientific (SMLR 30.87%) As it increasingly transforms from medical device company to Bitcoin Treasury Company, it is now accelerating its plans to purchase Bitcoin. And MARA Holding (MARA 29.92%)The world’s largest publicly traded Bitcoin mining company said it is about to add a lot more Bitcoin to its balance sheet.

Why are they doing this? The answer is simple: As long as the price of Bitcoin continues to rise, it makes complete financial and accounting sense. In fact, MicroStrategy uses a metric now known as Bitcoin yield to drive Bitcoin purchasing activity. Bitcoin return is defined as the percentage change from period to period in the ratio between the company’s Bitcoin holdings and its default Bitcoin holdings. diluted shares superior.

The markets certainly think MicroStrategy’s Bitcoin acquisition strategy makes sense. Consider that Bitcoin has nearly doubled this year (as on November 11) and MicroStrategy is up more than 360%. As Saylor noted, his company has outperformed every other company in the market. S&P 500 Since he started buying Bitcoin in August 2020.

A step back on MicroStrategy’s Bitcoin strategy

Of course, Saylor’s plan to buy as much Bitcoin as possible as quickly as possible would only make sense if the price of Bitcoin rose even further. If Bitcoin is truly heading towards $1 million, he’ll look like a genius at buying Bitcoin while it’s still under $100,000.

But what if Bitcoin’s price doesn’t go parabolic? This could cause a serious deterioration in the value of MicroStrategy, which has risked everything to become the Bitcoin Treasury Company. MicroStrategy’s market cap is now so closely tied to the price of Bitcoin that even a slight decline could be catastrophic.

Already, analysts have weighed in on MicroStrategy’s plan, looking for holes in some of its key assumptions. MicroStrategy, for example, plans to raise $21 billion in low-interest debt. But what if there is no investor demand for this debt and the company is forced to issue high-interest debt to attract buyers? This could send Bitcoin returns skyrocketing, not to mention the pressure it could put on the company. cash flow.

Where is Bitcoin headed in 2025?

Of course, the good news is that Donald Trump’s election victory looks set to pave the way for a rally in Bitcoin in 2025. Trump has promised to improve the regulatory environment for crypto and allocate more government resources to support Bitcoin.

And just like MicroStrategy, the US government may embark on a Bitcoin buying spree of its own next year. According to the latest vision for the strategic Bitcoin reserve, the United States could purchase up to 1 million Bitcoins in the near future. This will likely force other countries to follow suit.

So, while it may seem incomprehensible to most people that the price of Bitcoin has risen above $1 million in just a few years, consider what could happen if every sovereign nation went on a Bitcoin buying spree. This could result in the kind of Bitcoin gold rush that Saylor predicts.