Original Title: In Q2 Earnings, MSTR Surges, and Coinbase Stumbles. But What's Next?

Host: Steven Ehrlich, Chief Writer at Unchained

Guest: Lance Vitanza, Managing Director and Head of Equity Research at TD Cowen;

Podcast Date: August 2, 2025

Compiled by: Fairy, ChainCatcher

Editor's Note:

On July 31, Strategy announced its Q2 2025 financial results, with net income reaching a record high of $10 billion and earnings per share at $32.60.

In this episode, host Steven Ehrlich and TD Cowen's Head of Equity Research, Lance Vitanza, delve into the key highlights behind the earnings report, covering Bitcoin holding strategies, capital structure adjustments, financing tool selections, and how key financial metrics (such as Bitcoin Yield and Bitcoin per share) reveal its growth potential.

Lance interprets Strategy's leading position in the wave of Bitcoin financialization from a research perspective and discusses the potential "demonstration effect" it may have on the crypto vault sector.

The following is the conversation, compiled by ChainCatcher.

Steven: What do you think are the most noteworthy highlights from Strategy's Q2 earnings report?

Lance: For me, the most critical point is that the company raised its full-year Bitcoin yield expectation from 25% to 30%. While I still think this target is conservative, it is already double what was expected at the beginning of the year.

In the companies I track, it is rare to see one that can meet its raised target so early in the year and then raise it again. This indicates very strong performance.

Steven: Why do you think they were able to achieve this?

Lance: First, the current regulatory environment is very favorable for Strategy and other Bitcoin vault companies.

We see several positive signals: the FASB has modified accounting rules, and the White House has indicated in reports that it will maintain favorable tax treatment for unrealized gains on crypto assets. This is one of the most favorable policy contexts, which is also reflected in the strong performance of Bitcoin prices.

Of course, credit also goes to Strategy's own strategy. They are not only aggressive but also very creative and execution-oriented. They have precisely tapped into different capital markets, such as:

• Raising about $8.5 billion in the convertible bond market, with $2 billion issued this year;
• Successfully launching Strike aimed at the preferred stock market;
• Subsequently entering the high-rated preferred stock market with Strife;
• Recently launching new products aimed at retail investors to attract more funds.

Steven: They reported a profit of $10 billion, but some question whether this is just an "inflated performance" due to changes in accounting rules. What would the results look like if they had been measured at market value since 2020?

Lance: We actually did a retrospective calculation, and the results are clear: the asset curve has always been upward.

Even if we adjust the 2024 financial report according to the new rules, we would still see significant growth. As of yesterday, the company reported Bitcoin-related earnings exceeding $13 billion, not including the gains from stock issuance, which were entirely earned through existing Bitcoin positions, meaning there was no dilution of shareholder equity.

In comparison, the entire year of 2024 was $12 billion, and now, just in the first seven months of 2025, it has already surpassed that number. More importantly, their new target is to reach $20 billion for the year, which is essentially doubling.

So, even without considering the changes in accounting rules, this company has indeed achieved very strong growth. The new accounting standards amplify the results, but they are not the sole reason for the growth.

Steven: Strategy now seems to be gradually exiting the convertible bond market. While their balance sheet is relatively healthy, they seem to plan to actively repurchase or clean up debt. What do you think? What does this mean for their future financing strategy?

Lance: I think this is a positive signal, indicating that Strategy is upgrading its capital market strategy.

In the past, they primarily financed through convertible bonds, but this market is mainly focused on arbitrage, with institutions buying bonds while shorting stocks to hedge risks.

But now, as the company grows, they have the capability to shift to the preferred stock market. In contrast, preferred stocks offer more efficient capital appreciation, better terms, and stronger leverage.

This also provides a reference for other Bitcoin vault companies (PBTC). Many of these companies start with convertible bonds, but the ideal path should be to gradually shift to more stable and credit-advantaged financing channels, like Strategy.

Steven: You mentioned that convertible bonds are currently a suitable financing method for many crypto vault companies. Can you elaborate? What signs indicate that they are ready to enter the preferred stock market? If these companies still face significant debt pressure, what risks should investors pay attention to?

Lance: First, to enter the preferred stock market, a company must be large enough.

Taking Strategy as an example, they only began to engage with Bitcoin in the fall of 2020, and it has only been four years since then, while their first preferred stock issuance was in January of this year. At that time, their market capitalization and Bitcoin positions were already quite substantial, and their stock performance was very strong.

So, the good news is that if convertible bonds are operated properly, they can indeed bring considerable appreciation. For many PBTCs, starting with convertible bonds is a reasonable path, and the key is execution. Whether the new batch of companies can replicate this success will take time to observe.

This is a sector with sufficient market space. Michael Saylor himself has been actively supporting the development of other PBTCs; this is not competition but a win-win situation.

The more PBTCs there are, the more they can attract funds into the entire sector, which will also drive Bitcoin deeper into the global financial system. This is beneficial for Strategy, not a threat.

Steven: There is a new commitment in the earnings report: they will not issue common stock when the MNAV (Market Net Asset Value) is below 1. Can this practice be promoted among other crypto vault companies? What do you think of such a commitment?

Lance: For Strategy, this is actually not a new practice. They have never issued common stock when the MNAV was below 1, and we never expected them to do so.

The real new commitment is that if the MNAV does not exceed 2.5 (i.e., a premium of over 150%), they will not issue common stock unless it is to pay dividends, interest, or for daily operational expenses. In other words, even if the MNAV reaches 2, they will not issue stock to buy Bitcoin.

Previously, they had issued a large amount of common stock when the MNAV was below 2.5 (even below 2), so this is indeed a significant shift.

For shareholders, this is certainly more reassuring. But it also brings new issues: if the current MNAV is only around 1.8, they will have to rely on other financing methods.

Considering they are no longer inclined to use convertible bonds, preferred stock will become the main channel.

Currently, their IPO performance is very strong, but the response to the ATM (At-The-Market) issuance has been average. However, this may change due to the newly launched floating rate preferred stock STRC.

This new stock had very strong trading volume in its first week on Nasdaq, and it is possible to expand issuance through the ATM method in the future, which was also officially announced in their earnings report yesterday.

Steven: They are now frequently mentioning two metrics: "Bitcoin per share" and "Bitcoin yield." Can you briefly explain the difference between these two and why the latter is more important?

Lance: Actually, these two metrics are closely related. The calculation of Bitcoin yield itself relies on "Bitcoin per share."

The underlying data for the yield we publish is actually the change in "Bitcoin per share." So I don't think "Bitcoin per share" is a brand new concept; they are just making it more prominent this time.

Assuming from the beginning of 2023 to now, the company's Bitcoin per share has grown by about 130%. In other words, if you held one share, the corresponding Bitcoin now is 2.3 times what it was then, which is an astonishing growth.

As for "Bitcoin yield," for example, they are currently reporting 25%, meaning the number of Bitcoin per share has increased by 25% compared to the past.

Personally, I am not too concerned about "what the specific per share amount is"; I am more focused on the speed of growth of this number. So comparatively, I pay more attention to the "Bitcoin yield" metric.

Steven: What do you think is Strategy's ultimate goal? Is it healthy for a company in the Bitcoin industry to hold such a large share while still in the "early stages"?

Lance: Currently, Strategy holds about 630,000 Bitcoins, accounting for about 3% of the total Bitcoin supply (21 million Bitcoins). This ratio is calculated based on the total supply, including the 5% that is considered permanently lost.

From a broader perspective, this company still has a lot of growth potential in the future. However, there will indeed come a day when the amount of Bitcoin they hold will reach a certain "limit," and continuing to increase their holdings may affect the broader financial applications of Bitcoin.

No one can determine what this critical point will be. My view is that they still have about ten years to continue pushing their current strategy and keep increasing their holdings.

Our model predicts that by the end of 2027, they may hold about 4.3% of the total Bitcoin supply, which is about 1.3 percentage points more than now. What is foreseeable now is that they still have stable growth potential in the coming years.

Steven: Strategy has raised its full-year target due to the successful execution of its Bitcoin strategy in the first six months. I saw that your report updated the model this morning. Can you share your current predictions for the end of the year?**

Lance: Our current prediction is a Bitcoin yield of 32.1% for the full year.

This number is 2.1 percentage points higher than the company's current official target, and we believe the company is very likely to raise its target again, even exceeding expectations. Frankly, I think our 32.1% prediction has a greater likelihood of being revised upward rather than downward.

Our method of calculating "Bitcoin earnings" is slightly different from theirs; we base it on the cost price at the time of purchase rather than the market end price. So our data is somewhat more conservative and cannot be directly compared to the numbers disclosed by the company.

For reference, we predict that the company will achieve about $15.3 billion in Bitcoin earnings this year, with roughly $16 billion in the next two years.

Different calculation methods will yield a forecast range between $16 billion and $22 billion. We chose the more conservative approach, which we believe is more reasonable. But there is no single correct answer for the final result.

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