Strategy (MicroStrategy) pioneered the idea of corporations investing in Bitcoin, and now other companies are following its lead.
Companies that do nothing but invest in Bitcoin have shown the potential to deliver higher returns than even Bitcoin itself.
The fundamental premise of a Bitcoin-centric business model is that the price of Bitcoin will continue to go up in perpetuity.
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An interesting new trend has appeared in the financial world: the emergence of companies that do nothing but invest in Bitcoin (CRYPTO: BTC). These companies have a single, solitary mission: to buy and hold as much Bitcoin as they can.
The best known example is MicroStrategy (NASDAQ: MSTR), the company now doing business as Strategy. But there are a growing number of others, and together, they are frequently referred to as “MicroStrategy copycats.” So is it worth investing in these companies?
It’s hard to argue with the success of Strategy, which pioneered the idea of becoming a Bitcoin treasury company (BTC). Since the inception of its Bitcoin acquisition strategy back in August 2020, Strategy stock has outperformed Bitcoin. And, in fact, Strategy also outperformed every company in the S&P 500 between 2020 and 2024.
That helps to explain the appeal of the Bitcoin treasury company model. Simply put, these companies can deliver higher returns than Bitcoin, which has been the best-performing asset in the world in seven of the past 10 years.
Theoretically, you can make more money by investing in Strategy than by investing in Bitcoin. Just check out the results for 2025. For the year, Bitcoin is up just 2%, while Strategy is up a resounding 36% (as of May 7). So we’re talking about a potentially huge performance gap between Bitcoin and companies that invest in Bitcoin.
At the end of 2024, some companies began loading up on Bitcoin for their balance sheets. Bitcoin miners and cryptocurrency exchanges obviously need Bitcoin for their day-to-day operations. But we’re talking about companies in industries that have absolutely nothing to do with crypto. For example, did you know that there are now biotech companies loading up on Bitcoin?
At the end of the day, investors have a growing number of ways to invest in Bitcoin. Obviously, they can invest in Bitcoin directly via a cryptocurrency exchange such as Coinbase Global (NASDAQ: COIN) or a crypto trading platform such as Robinhood (NASDAQ: HOOD).
Or, just as easily, they could invest in a variety of different Bitcoin exchange-traded funds (ETFs). The most popular of these are the spot Bitcoin ETFs, which offer investors 1-to-1 tracking with the spot price of Bitcoin. If you’re feeling a little frisky, you could just as easily invest in other Bitcoin ETFs that use financial derivatives to deliver a little extra pop.
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And now you can also invest in companies that only invest in Bitcoin. These companies can offer superior performance to both Bitcoin and spot Bitcoin ETFs, within a corporate structure that is highly regulated.
The math behind this is interesting, since it relies on new metrics such as Bitcoin per share (BPS). This is calculated as the amount of Bitcoin that a company owns, divided by the number of shares outstanding (on a fully diluted basis). As long as Bitcoin per share is on the rise, the company is able to deliver value to the shareholders.
By investing in these companies, you are essentially making a bet that they can do more with their Bitcoin than you can do with your Bitcoin. For example, Strategy has pioneered the idea of using convertible debt to finance new Bitcoin purchases. This is something that you, as an individual investor, would not be able to do. At best, you might be able to use your credit cards to finance new Bitcoin purchases, but the cost of doing so would be astronomical.
Think about Bitcoin per share in the same way that you think about earnings per share. If a company is cranking out higher earnings per share, its overall valuation should go up, right? And if a company is cranking out higher Bitcoin per share, its overall valuation should also go up.
All of this might sound like a ringing endorsement of companies that only invest in Bitcoin. But here’s the catch: it is only a good idea if the price of Bitcoin continues to go up. If the price of Bitcoin stagnates or declines in value, the business model runs into trouble. Even worse, you won’t own the Bitcoin if things go south — the company will.
For Bitcoin purists, the primary allure of Bitcoin is being able to buy and sell a peer-to-peer digital currency that doesn’t require financial intermediaries. Anyone who bought Bitcoin in the early days emphasized the following point: Make sure you self-custody with your own personal blockchain wallet so that you own the Bitcoin yourself.
Yet during the past few years, Bitcoin investors have been embracing more and more financial intermediaries. I get it — it’s nice to fall back on things we know, like ETFs and publicly traded companies, and let them figure out the hard crypto part.
But it’s now gotten to the point where we are investing in companies that do nothing but invest in Bitcoin. We are no longer investing in Bitcoin directly, but rather, investing in companies that will invest in Bitcoin for us.
This approach works well when the price of Bitcoin is rising. And it works incredibly well when the price of Bitcoin is soaring. But how well does it work when the price of Bitcoin starts to decline?
As a result, my personal preference is to buy Bitcoin directly. Over time, I’m convinced Bitcoin will outperform any company that attempts to out-Bitcoin Bitcoin.
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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.
Should You Invest in a Company That Only Invests in Bitcoin? was originally published by The Motley Fool
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