Part 5/9:

Crucially, MicroStrategy has financed its Bitcoin purchases primarily through convertible notes, allowing them to raise debt capital rather than relying solely on their revenues. However, this approach introduces a layer of speculation and risk, as the future payment to lenders hinges on the performance of MicroStrategy’s stock price rather than directly on Bitcoin's value.

Understanding the Financial Mechanism

Meron elaborated on the convertible note mechanism utilized by MicroStrategy. By issuing such notes, the company assures lenders that they can either have their principle returned after four to five years or convert it into discounted shares if MicroStrategy’s stock appreciates.