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Bitcoin led the crypto market to fall across the board, and the pessimistic liquidity outlook exacerbated the market's selling sentiment. In this market environment, investors can't help but worry that MicroStrategy, a veteran Bitcoin leverager, will encounter a "turnover." But to some extent, Strategy's convertible bond structure and financing capabilities reduce the possibility of its Bitcoin being forcibly pledged or liquidated.Bitcoin led the crypto market to fall across the board, and the pessimistic liquidity outlook exacerbated the market's selling sentiment. In this market environment, investors can't help but worry that MicroStrategy, a veteran Bitcoin leverager, will encounter a "turnover." But to some extent, Strategy's convertible bond structure and financing capabilities reduce the possibility of its Bitcoin being forcibly pledged or liquidated.

“Selling a kidney to keep Bitcoin”: Strategy’s long bet faces liquidation concerns

Author: PANews

Source: PANews

2025/02/28 17:29

6 min read

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Author: Nancy, PANews

"Sell a kidney if necessary, but keep your Bitcoin." This seemingly humorous joke in the latest tweet by Michael Saylor, founder of Strategy (formerly MicroStrategy), actually expresses his strong belief in the long-term value of Bitcoin.

“Selling a kidney to keep Bitcoin”: Strategy’s long bet faces liquidation concerns

In recent times, Bitcoin has led the crypto market to fall across the board, and the pessimistic liquidity outlook has exacerbated the market's selling sentiment. In this market environment, investors can't help but worry that MicroStrategy, a veteran Bitcoin leverager, will encounter a "turnover."

The long bet encounters a cold snap, what is the risk of liquidation?

The Bitcoin super-bullish strategy is facing the dual pressures of profit withdrawal and falling stock prices.

MSTR-tracker data shows that as of February 28, Strategy holds a total of 499,096 bitcoins, with a total purchase cost of nearly $33.12 billion and an average purchase price of about $66,357. The current total value of bitcoin holdings is $39.57 billion. Compared with Strategy's highest bitcoin holding profit of nearly $20 billion in previous months, it has now dropped to $6.45 billion.

“Selling a kidney to keep Bitcoin”: Strategy’s long bet faces liquidation concerns

As the floating profit retracement was significant, Strategy's stock price continued to fall. Google Finance shows that as of February 28, Strategy's stock price has fallen by more than 39.4% from its high of $396.5 this year. The market has also raised concerns that the "Bitcoin Treasury" company may be forced to liquidate its Bitcoin holdings. As crypto analyst Miles Deutscher pointed out, the premium rate of Strategy's market value relative to its Bitcoin assets has dropped from 3.4 times in November last year to 1.6 times at present. The lower this value is, the more difficult it will be for Michael Saylor to raise more funds to buy Bitcoin, which means that his pace of buying Bitcoin may slow down.

However, the analysis agency The Kobeissi Letter believes that this situation is "almost impossible to happen". The reason is that the structural design of Strategy's convertible notes, the company's ability to raise $1.8 billion in equity during the decline of Bitcoin, and Michael Saylor's 46.8% voting rights together constitute a strong guarantee to prevent forced liquidation. Even if the price of Bitcoin falls by 50% to $33,000, Strategy's assets will still exceed its debt by more than 100%.

At present, Strategy has a total of $9.26 billion in unsecured debt. According to Strategy's official website, the company has six outstanding convertible bonds, most of which were issued at extremely low interest rates and have maturity dates after 2028, with the latest debt due in June 2032. Even though the two largest bonds total $5 billion, accounting for more than half of the total debt, and the market price of their convertible bonds is lower than the issue price, which may increase market concerns about these debts, these debts will not mature until after the end of 2029, and Strategy has enough time to respond and adjust. What's more, the bitcoins held by Strategy are not directly pledged as collateral for loans, and their funds mainly come from external investors. To some extent, Strategy's convertible bond structure and financing capabilities reduce the possibility of its bitcoins being forcibly pledged or liquidated.

“Selling a kidney to keep Bitcoin”: Strategy’s long bet faces liquidation concerns

In addition, the stock holdings of Strategy not only show the high recognition and confidence of large institutional investors in Strategy, but also bring it stronger market credibility and capital support. Fintel data shows that Strategy has 1,403 institutional owners and shareholders, such as Susquehanna International Group, Vanguard Group, IMC-Chicago, Citadel Advisors, Jane Street Group, Capital International and BlackRock.

Continue to be bullish against the market trend, and set a target of 10 billion yuan in revenue in 2025

Despite the cold snap in the crypto market, Michael Saylor remained firmly bullish and even continued to increase his holdings when Bitcoin fell.

In a recent public occasion, Michael Saylor reiterated that Bitcoin is becoming the "world's reserve capital network", superior to real estate and stocks, and is a digital capital worth holding for the long term. He predicted that the current market value of the Bitcoin network of $2 trillion will grow to $20 trillion in the next 4 to 8 years, surpassing the growth rate of other global assets, and said that "volatility is a gift for loyalists." Saylor even said that he would donate his personal shares to public charities that support Bitcoin after his death, which also shows his deep belief in Bitcoin.

"From selling software to selling Bitcoin, Saylor's orange empire has taken shape." In order to emphasize its crypto-centric business, Strategy recently rebranded. In early February of this year, Strategy stated in an announcement that as the world's first and largest Bitcoin financial company, the brand simplification was a natural evolution of the company, reflecting the company's focus and broad appeal. The new logo includes a stylized "B", representing the company's Bitcoin strategy and its unique position as a Bitcoin financial company. The brand's main color is now orange, representing energy, wisdom and Bitcoin. At the same time, Strategy also launched a new software website strategysoftware.com and a branded merchandise website store.strategy.com. (Related reading: MicroStrategy changed its name to "Strategy", and its Bitcoin holdings in Q4 almost doubled, and it wants to be a Bitcoin "smart leverage" )

In terms of the advancement of the crypto industry, Strategy not only launched the Bitcoin Hub co-working space to attract innovators to promote the development of the Bitcoin ecosystem, but also met with the SEC Crypto Working Group to propose a digital asset regulatory framework and try to establish clear boundaries for the market. In the industry's view, Saylor is not only hoarding Bitcoin, but also shaping industry rules, showing the attitude of a long-term player.

It is worth mentioning that Strategy announced that it would adopt the latest FASB accounting standards in the first quarter of 2025. If Bitcoin closes above $96,337 in the first quarter, Strategy's positive profitability is expected to meet the conditions for inclusion in the S&P 500 index. Once achieved, Strategy will further enhance its market influence. In its previously released financial report, Strategy announced that its Bitcoin revenue target for 2025 is set at $10 billion, with an annualized return of 15%.

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The gaming industry is in the midst of a historic shift, driven by the rise of Web3. Unlike traditional games, where developers and publishers control assets and dictate in-game economies, Web3 gaming empowers players with ownership and influence. Built on blockchain technology, these ecosystems are decentralized by design, enabling true digital asset ownership, transparent economies, and a future where players help shape the games they play. However, as Web3 gaming grows, security becomes a focal point. The range of security concerns, from hacking to asset theft to vulnerabilities in smart contracts, is a significant issue that will undermine or erode trust in this ecosystem, limiting or stopping adoption. Blockchain technology could be used to create security processes around secure, transparent, and fair Web3 gaming ecosystems. We will explore how security is increasing within gaming ecosystems, which challenges are being overcome, and what the future of security looks like. Why is Security Important in Web3 Gaming? Web3 gaming differs from traditional gaming in that players engage with both the game and assets with real value attached. Players own in-game assets that exist as tokens or NFTs (Non-Fungible Tokens), and can trade and sell them. These game assets usually represent significant financial value, meaning security failure could represent real monetary loss. In essence, without security, the promises of owning “something” in Web3, decentralized economies within games, and all that comes with the term “fair” gameplay can easily be eroded by fraud, hacking, and exploitation. This is precisely why the uniqueness of blockchain should be emphasized in securing Web3 gaming. How Blockchain Ensures Security in Web3 Gaming?

Immutable Ownership of Assets Blockchain records can be manipulated by anyone. If a player owns a sword, skin, or plot of land as an NFT, it is verifiably in their ownership, and it cannot be altered or deleted by the developer or even hacked. This has created a proven track record of ownership, providing control back to the players, unlike any centralised gaming platform where assets can be revoked.
Decentralized Infrastructure Blockchain networks also have a distributed architecture where game data is stored in a worldwide network of nodes, making them much less susceptible to centralised points of failure and attacks. This decentralised approach makes it exponentially more difficult to hijack systems or even shut off the game’s economy.
Secure Transactions with Cryptography Whether a player buys an NFT or trades their in-game tokens for other items or tokens, the transactions are enforced by cryptographic algorithms, ensuring secure, verifiable, and irreversible transactions and eliminating the risks of double-spending or fraudulent trades.
Smart Contract Automation Smart contracts automate the enforcement of game rules and players’ economic exchanges for the developer, eliminating the need for intermediaries or middlemen, and trust for the developer. For example, if a player completes a quest that promises a reward, the smart contract will execute and distribute what was promised.
Anti-Cheating and Fair Gameplay The naturally transparent nature of blockchain makes it extremely simple for anyone to examine a specific instance of gameplay and verify the economic outcomes from that play. Furthermore, multi-player games that enforce smart contracts on things like loot sharing or win sharing can automate and measure trustlessness and avoid cheating, manipulations, and fraud by developers.
Cross-Platform Security Many Web3 games feature asset interoperability across platforms. This interoperability is made viable by blockchain, which guarantees ownership is maintained whenever assets transition from one game or marketplace to another, thereby offering protection to players who rely on transfers for security against fraud. Key Security Dangers in Web3 Gaming Although blockchain provides sound first principles of security, the Web3 gaming ecosystem is susceptible to threats. Some of the most serious threats include:

Smart Contract Vulnerabilities: Smart contracts that are poorly written or lack auditing will leave openings for exploitation and thereby result in asset loss. Phishing Attacks: Unintentionally exposing or revealing private keys or signing transactions that are not possible to reverse, under the assumption they were genuine transaction requests. Bridge Hacks: Cross-chain bridges, which allow players to move their assets between their respective blockchains, continually face hacks, requiring vigilance from players and developers. Scams and Rug Pulls: Rug pulls occur when a game project raises money and leaves, leaving player assets worthless. Regulatory Ambiguity: Global regulations remain unclear; risks exist for players and developers alike. While blockchain alone won’t resolve every issue, it remediates the responsibility of the first principles, more so when joined by processes such as auditing, education, and the right governance, which can improve their contribution to the security landscapes in game ecosystems. Real Life Examples of Blockchain Security in Web3 Gaming Axie Infinity (Ronin Hack): The Axie Infinity game and several projects suffered one of the biggest hacks thus far on its Ronin bridge; however, it demonstrated the effectiveness of multi-sig security and the effective utilization of decentralization. The industry benefited through learning and reflection, thus, as projects have implemented changes to reduce the risks of future hacks or misappropriation. Immutable X: This Ethereum scaling solution aims to ensure secure NFT transactions for gaming, allowing players to trade an asset without the burden of exorbitant fees and fears of being a victim of fraud. Enjin: Enjin is providing a trusted infrastructure for Web3 games, offering secure NFT creation and transfer while reiterating that ownership and an asset securely belong to the player. These examples indubitably illustrate that despite challenges to overcome, blockchain remains the foundational layer on which to build more secure Web3 gaming environments. Benefits of Blockchain Security for Players and Developers For Players: Confidence in true ownership of assets Transparency in in-game economies Protection against nefarious trades/scams For Developers: More trust between players and the platform Less reliance on centralized infrastructure Ability to attract wealth and players based on provable fairness By incorporating blockchain security within the mechanics of game design, developers can create and enforce resilient ecosystems where players feel reassured in investing time, money, and ownership within virtual worlds. The Future of Secure Web3 Gaming Ecosystems As the wisdom of blockchain technology and industry knowledge improves, the future for secure Web3 gaming looks bright. New growing trends include: Zero-Knowledge Proofs (ZKPs): A new wave of protocols that enable private transactions and secure smart contracts while managing user privacy with an element of transparency. Decentralized Identity Solutions (DID): Helping players control their identities and decrease account theft risks. AI-Enhanced Security: Identifying irregularities in user interactions by sampling pattern anomalies to avert hacks and fraud by time-stamping critical events. Interoperable Security Standards: Allowing secured and seamless asset transfers across blockchains and games. With these innovations, blockchain will not only secure gaming assets but also enhance the overall trust and longevity of Web3 gaming ecosystems. Conclusion Blockchain is more than a buzzword in Web3; it is the only way to host security, fairness, and transparency. With blockchain, players confirm immutable ownership of digital assets, there is a decentralized infrastructure, and finally, it supports smart contracts to automate code that protects players and developers from the challenges of digital economies. The threats, vulnerabilities, and scams that come from smart contracts still persist, but the industry is maturing with better security practices, cross-chain solutions, and increased formal cryptographic tools. In the coming years, blockchain will remain the base to digital economies and drive Web3 gaming environments that allow players to safely own, trade, and enjoy their digital experiences free from fraud and exploitation. While blockchain and gaming alone entertain, we will usher in an era of secure digital worlds where trust complements innovation. The Role of Blockchain in Building Safer Web3 Gaming Ecosystems was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story