MicroStrategy Shareholders Face Growing Dilution Risk as Bitcoin Buys Mount

MicroStrategy's Bitcoin obsession just cost shareholders another piece of their company.

The Dilution Dilemma

Every fresh Bitcoin purchase comes with hidden dilution costs—slowly eroding shareholder value while the company doubles down on crypto. They're issuing new shares faster than Bitcoin mining rigs solve algorithms.

Corporate Treasury Gambit

While other companies focus on operations, MicroStrategy treats its balance sheet like a crypto hedge fund. The strategy either makes them visionaries or the most expensive Bitcoin ETF wrapper in existence.

Wall Street's Cynical Take

Because nothing says 'stable corporate strategy' like constantly diluting shareholders to buy volatile digital assets. At this rate, they'll own 1% of Bitcoin and 0% of their original shareholders.

Another bull gets more bullish

Before market open that day, Compass Point's Michael Donovan pulled the lever on that raise, and it was a doozy. He cranked his Iren fair-value assessment more than 100% higher, to $50 per share, from the preceding $23. At the risk of stating the obvious given such a bullish move, he maintained his buy recommendation.

Image source: Getty Images.

Similar to other analysts, Donovan's sunnier take on Iren's future is based on the business pivot it's currently undergoing, according to reports. While maintaining its foundationalmining operations, management is assertively pushing into data center buildouts.

What's appealing about this is that such facilities have great potential, given the increased resource requirements of artificial intelligence (AI) technology, which represents quite the leap over existing tech.

Low supply means high potential

To Donovan, Iren's recent purchases of hardware to bolster its AI-supporting infrastructure are clear indications of its devotion to the pivot. He finds this particularly encouraging, as the general supply of high-density computing resources should be limited over the next few years.