Bitcoin‘S (BTC 3.08%) The price has more than doubled this year and is currently hovering near all-time highs. Some investors may be wary of chasing that rally, but one of Bitcoin’s biggest bulls is MicroStrategy‘S (MSTR 8.35%) billionaire executive chairman Michael Saylor isn’t budging.

Under Saylor’s leadership, MicroStrategy purchased its first $250 million worth of Bitcoin in 2020. By November 10, 2024, its holdings had grown to 279,420 Bitcoins with a total purchase price of $11.9 billion and a market value of $24.5 billion.

MicroStrategy’s Bitcoin portfolio is equal to about a third of the company’s enterprise value of $73.3 billion, and about 1.4% of Bitcoin’s market cap of $1.8 trillion. And it has continued to buy more Bitcoin even as its price has soared. From October 31 to November 10, it bought an additional 27,200 Bitcoins for a total of $2.03 billion, at an average price of $74,463. So why is this enterprise software company still so bullish on Bitcoin?

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Saylor expects Bitcoin to rise even higher

Saylor believes Bitcoin’s price will reach $100,000 by the end of 2024 and eventually rise to $13 million over the next 21 years. That sky-high price target would mean a gain of almost 15,000% compared to the current price. In a CNBC interview, Saylor predicted that Bitcoin will eventually grow from 0.1% of the world’s capital to 7% as more financial institutions choose to offer Bitcoin-related services. He also expects that the crypto will eventually trade in higher volumes than the cryptocurrency S&P500on the assumption that it will convince investors with its open, global and free approach to capital markets.

Most of Saylor’s net worth is directly tied to the price of Bitcoin. He directly owns 17,732 Bitcoins with a market value of $1.6 billion. That’s almost a fifth of his estimated net worth of $8.3 billion. Another $6.5 billion of that total comes from its 9.9% stake in MicroStrategy, which is valued primarily for its Bitcoin holdings rather than its enterprise software business.

Is MicroStrategy’s Bitcoin Strategy Sustainable?

MicroStrategy’s transformation into a Bitcoin hoarder was abrupt. Before 2020, most investors knew the company as a slow-growing provider of data mining and analytics software. From 2013 to 2023, its annual revenue fell from $576 million to $496 million as it struggled to keep pace with faster-growing cloud competitors such as Microsoft And Salesforce. To offset that pressure, Saylor focused the company on Bitcoin.

To stabilize its core software business, MicroStrategy has transformed its on-site applications into subscription-based cloud services. It also recently launched its own generative AI platform, MicroStrategy AI, to help companies integrate AI tools into their own data applications. These newer cloud and AI initiatives could stabilize the software business and help generate more money for future Bitcoin purchases.

Looking only at its software business, MicroStrategy’s near-term prospects are not impressive. Analysts expect revenue to grow only at a compound annual rate of 1% from 2023 to 2026 as the company remains unprofitable under generally accepted accounting principles (GAAP).

MicroStrategy is bleeding red ink because the impairment charges from its Bitcoin purchases are eclipsing the total revenue generated by its software business. It’s also taking on a lot more debt and issuing more stock to finance those purchases. That’s why total liabilities have more than quadrupled since the end of 2020, and why the number of MicroStrategy shares outstanding has more than doubled over the past four years. It’s not slowing down either: It plans to raise another $42 billion ($21 billion through secondary equity offerings and $21 billion through fixed income sales) over the next three years to fund more Bitcoin purchases.

It’s an all-in bet on Bitcoin

If you’re bullish on Bitcoin and bearish on the US dollar, MicroStrategy could be a tempting bet on the future of the cryptocurrency. If Bitcoin’s price soars against the US dollar, the value of its Bitcoin holdings should easily cover its dollar-based debt. But if Bitcoin’s price plummets, MicroStrategy’s balance sheet could crumble. It’s still a risky stock, but the big bet on Bitcoin could pay off in the coming years and push the stock much higher.