After experiencing a recent surge, bitcoin has taken on a new twist. A brand new concept has emerged – 'BTC yield.'

$MicroStrategy (MSTR.US)$ Introduced this unusual term to investors in August. For those unfamiliar, "BTC" refers to bitcoin, while "yield" is the ratio of investment returns to investment principal.

However, 'BTC yield' is not that simple. As the company explained, it refers to the percentage change in the number of bitcoins owned by microstrategy per share between two dates.

So far this year, the company's stock price has skyrocketed by 650%, far exceeding the rise in bitcoin prices. If bitcoin prices fall, microstrategy will face a devastating blow. Whether 'BTC yield' can withstand the test of the market remains to be seen.

'BTC yield': A brand new concept.

Microstrategy uses 'BTC yield' as an indicator to measure its bitcoin acquisition strategy. In its documentation, microstrategy explained that the concept of BTC yield refers to the percentage change in the number of bitcoins owned by the company per share between two dates.

Specifically, as of November 17, assuming all of the company's convertible debt has been converted into stocks, then every 1,000 shares of outstanding stock would hold 1.29 bitcoins. This ratio has increased by 41.8% compared to December 31 of last year, when each 1,000 shares held only 0.91 bitcoins. Microstrategy refers to this 41.8% increase as the 'year-to-date BTC yield.'

This yield can be calculated over different periods, such as quarterly or year-on-year, and it is also possible to choose any two dates with data for comparison.

Recently, the BTC yield has shown a rapid upward trend. Just a week ago, microstrategy announced in a press release that "the year-to-date BTC yield has reached 26.4%," which is a significant increase compared to 17.8% on September 30.

When microstrategy first established BTC yield as a key performance indicator, the company ambitiously stated that starting next year, they would strive to increase this indicator to a range of 4% to 8%.

If the price of bitcoin falls, microstrategy's stock price will suffer a fatal blow.

Since 2020, microstrategy has turned its attention to bitcoin, and the company's co-founder and executive chairman Michael Saylor has become a fervent supporter of bitcoin, initiating large-scale buying actions.

In order to continuously increase its shareholding in bitcoin, the company does not hesitate to continuously sell stocks for cash. The value of bitcoin held by microstrategy is nearly four times that of the total of ordinary investors.

Last month, microstrategy announced again that it would raise 42 billion dollars in funding over the next three years for large-scale purchases of bitcoin.

However, the repetitive operation of "selling stocks and buying bitcoin," while boosting the company's stock price, also faces tremendous market risks. According to the latest data, the company holds 331,200 bitcoins, with a market cap of as high as 31.2 billion dollars.

Microstrategy's stock price has risen astonishingly, soaring 650% this year, far exceeding the price increase of bitcoin. This reflects investors' fervent enthusiasm for the company's bitcoin investment strategy.

This strategy of 'betting' on bitcoin has raised concerns in the market. Analysis points out that microstrategy's software business value is not noteworthy, and its high corporate debt also increases financial risk. If the price of bitcoin drops, the company's stock price will take a fatal hit.

Wall Street Journal reporter Jonathan Weil stated:

"If you are bullish on the future of bitcoin, directly purchasing bitcoin may be a more effective choice. While your judgment about market trends may not be more accurate than others, at least you can directly participate in the market."

"Choosing to invest in microstrategy, however, is betting on an inefficient market, thus becoming even more inefficient."

Editor/Somer