Originally published in Svenska Dagbladet by Björn Jeffery, May 30, 2025

Donald Trump’s listed company, the games retailer GameStop, and Japanese love hotels. All three have adopted their new strategy from stock market favourite MicroStrategy: borrow money and buy bitcoin. Enthusiasts see a rocket ship — critics warn of a crash.

They are called love hotels. Simple Japanese hotels that can be rented by the hour for a private meeting. They are popular in a culture where many people live at home until they marry.

The company Metaplanet had these as its business idea for many years. Somewhat forgotten on the stock market, the company’s share price barely moved for several years. In 2024, the management decided to change strategy. Now they would buy bitcoin instead. In one year, the share price has surged by over 1,900 percent.

Metaplanet is not alone. When their ordinary business falters, more and more companies are now turning to bitcoin as an alternative. And it all started with a man whose personal fortune fell by around 60 billion kronor after he was accused of accounting fraud.

The central figure behind the phenomenon is named Michael Saylor. He is the founder of the company MicroStrategy Incorporated, which recently renamed itself the more abstract “Strategy.” But it is the name MicroStrategy that has become known among both thousands of retail investors and large hedge funds and institutions.

MicroStrategy was originally a business intelligence company that sold software. The company was listed on the stock exchange in 1998, and just a year later Saylor was named the wealthiest man in Washington DC.

That wealth was short-lived. In March 2000, MicroStrategy announced that the financial results of the previous two years were inaccurate and needed to be restated. The share price dropped like a stone — a full 62 percent in a single day. Saylor had to pay a fine but escaped having to admit that he had done anything criminal.

Fast forward 20 years and Saylor delivers a quarterly report for MicroStrategy, July 2020. The share price that once stood as high as 333 dollars now sits at around 11 dollars. Saylor announces that the company will buy bitcoin using part of its cash holdings, and a month later the company has purchased 21,454 of them.

Neither Saylor nor anyone else could have anticipated that this purchase would lay the foundation for the company’s entire business — and start a trend that would sweep up billion-dollar companies in its wake.

The MicroStrategy model is both remarkably simple and yet difficult to understand. The company sells shares or issues bonds of various kinds to the market. With the money it receives it buys bitcoin. Had the assets it was buying been stable, they would have balanced each other out. But that is not the case with bitcoin, as is well known.

Instead, something very strange has emerged. When MicroStrategy issues a loan for 100 kronor, and then buys bitcoin for 100 kronor, its share price rises by 150 kronor. The numbers are not exact in any way, but they serve as an illustration of the phenomenon. The increased market capitalization means it can issue more loans, buy more bitcoin — and then see the market cap rise again. It sounds strange, doesn’t it? But in five years, MicroStrategy’s share price has risen by over 2,800 percent. The perpetual motion machine keeps spinning.

It surprises no one that the rise in the share price has attracted attention. The list of companies that now intend to copy MicroStrategy is long. Japan’s Metaplanet now has only one hotel left in its portfolio, The Royal Oak Gotanda in Tokyo. It is being converted and will soon be renamed “The Bitcoin Hotel.”

This week, the games retailer GameStop and Donald Trump’s media company TMTG both announced that they will do the same and invest in bitcoin as an asset in their respective companies. For them, however, the share price fell by around ten percent immediately after the news. Is the strategy already beginning to cool?

There is reason to suspect so, at least. The sceptical reader has probably already sensed a hole in the reasoning above. What happens to MicroStrategy and the other companies if the bitcoin price suddenly crashes? Or simply stops rising? Then the company is left with an enormous amount of outstanding debt even though the assets in the business have collapsed. Creditors can then receive shares in the company, but who wants them if the value has crashed?

The short answer is that nobody really knows. A reasonable guess is that it would end badly. The slightly longer answer is that the risk is something one must accept in order to have the chance of the opposite scenario — that the price of bitcoin shoots skyward. Were that to happen, MicroStrategy, as one of the world’s largest holders of bitcoin, would have no problem settling its debts with a comfortable margin. But that this is not a share — or a risk profile — like any other is clear.

With these risks in mind, one might wonder who is actually trading in them. And here another picture of what is happening emerges. The innovation that MicroStrategy has created is, at its core, financial.

The company has constructed a long range of financial products that it sells to various funds and institutions. Since it still has a software product as well — the same idea as 20 years ago — funds that are not permitted to trade in cryptocurrencies can still buy MicroStrategy. There are ETFs (exchange-traded funds) created solely to trade the shares with leverage, meaning with even higher risk. The volatility — which for a retail investor might seem off-putting — becomes, on the contrary, attractive for certain funds with strategies that benefit from it.

The scale is enormous. On certain days this spring, exchange-traded funds built on MicroStrategy have been the most heavily traded securities on the American stock market. And everything rests on the simple thesis that if they raise more money, they can buy more bitcoin. The financial innovation is having created so many types of fund products that they can draw in money from every conceivable institution.

As the money flows into MicroStrategy, the bitcoin price has continued to rise. There is only a certain number in circulation, and there can never be more. That is part of the reasoning behind why the value will continue to go up. And if you believe that the price of bitcoin will only ever rise, you can also accept that MicroStrategy is valued at so much more than its underlying assets. The price is only going up, right?

But everything does not always continue upward on the stock exchange. The more companies that try to copy what MicroStrategy is doing, the more large buyers of bitcoin there are. But if they fail to replicate the same perpetual motion machine with fresh capital, that enthusiasm can quickly reverse.

Should the bitcoin price — for whatever reason — fall sharply, the situation on the ordinary stock market could also become very shaky. Cryptocurrencies have found the back door into the equity market, one could say. And with them, risks at a level that ordinary savers are unaccustomed to.