Strategy, Metaplanet, Bitcoin Amplification:

Strategy and Metaplanet are my favorite two options for a leveraged Bitcoin investment over the next 5, 10, 20 years.

There are so many unknowns in this undeveloped frontier, but it's fun to run amplification scenarios for both companies to see how disgustingly rich I get, assuming the Bitcoin thesis plays out.

As far as the unknowns go, we don't know how much demand there will immediately be for the Metaplanet prefs. I assume it will be a LOT given the capital they have already raised with the international investor, but certainty is not a thing in this game.

The good thing they have going for them is they only need about $560m more of MERCURY issued in order to reach 25% amplification because of their smaller stack size, and $560m is considerably less than Strategy's $899m of STRE that was just issued.

Regarding Strategy, their plan is to have the convertible debt equitize so that means they will need more preferred issuance to make up for that loss of convertible debt over the next 3-7 years. With the debt, they are currently 27% amplified, but that will be another unknown.

Obviously bullish on digital credit and the best product always wins in the marketplace, so I don't think they'll have any issue getting their amplification with prefs... and honestly once you run projections it's hard to see why they wouldn't want to be 40% amplified and above.

That said, if you are an investor right now, which one to buy is the question! There are many variables to consider... macro environment, regulatory concerns, etc... but if you are assuming that both are "safe" in the sense that they will be allowed to execute their strategy over the next 20 years, I think it is important to highlight the difference in the coupon drag vs. Metaplanet's 4.9% MERCURY and Strategy's average (let's call it ~10%).

Both are using digital credit strategies with perpetual preferred equity. Let's say they are both 25% amplified over the next 20 years to highlight the difference in coupon drag and the effect it will have on sats per share growth (yes, this matters. If you don't believe that, you shouldn't be investing in companies that have Bitcoin value represented by shares).

Let's also assume a 30% BTC CAGR from today's price. You can put in 20-25% if you want, but I'm going with 30%. Will this be right? No idea. Saylor thinks 30% for the next 20 years and 20% after that. So if you disagree, run your own model.

25% amplification, 30% BTC CAGR, coupon-drag adjusted:

Strategy:
shares: 295.663m
btc: 650,000
sats per share: 219,800

Metaplanet:
shares: 1.14b
btc: 30,823
sats per share: 2,146

Year 5 sats per share:
MSTR: 346,659
MTPLF: 4,573

Year 10 sats per share:
MSTR: 366,770
MTPLF: 5,152

Year 20 sats per share:
MSTR: 1,222,894
MTPLF: 24,734

So, who WINS as an investor?

The coupon drag differential is significant.

Absolute sats per share growth for MSTR is massive 274k to 1.22m. For Metaplanet it's 3.38k to 24.7k.

But as an investor, I'm concerned about % growth.

MSTR 4.45x'd their sats per share.

Metaplanet 7.32x'd their sats per share.

MSTR sats per share CAGR: 8%/yr
MTPLF sats per share CAGR: 11.2%/yr

For the first five year window the gap in growth rates is very modest, but by year 20 the lower coupon snowballs into a very clearly steeper curve for Metaplanet.

Of course, I am a shareholder of both companies are there are many different reasons for holder vs BTC per share growth under different cost of capital scenarios.

I think I probably favor MSTR when it comes to safety in scale + their ability to achieve higher levels of amplification...

But when it comes to cost of capital in Japan, this cannot be understated as a huge advantage if you are looking for a long term leveraged bet on Bitcoin price movement.