Flying into the Future SPAC

Article Author: Prathik Desai Article Translation: Block unicorn

In 2020, Strategy (then known as MicroStrategy) began converting debt and stock into Bitcoin. It purchased BTC, becoming the largest publicly traded Bitcoin holder.

Five years later, the company is still selling software, but the contribution of operating gross profit to the overall company continues to decline. In 2024, operating gross profit decreased to about 15% compared to 2023. In the first quarter of 2025, this figure fell by 10% compared to the same period last year. By 2025, Strategy's strategies have been imitated, improved, and simplified, paving the way for over a hundred publicly traded entities to hold Bitcoin.

The strategy is simple: finance the business with low-cost debt, purchase Bitcoin, wait for its appreciation, and then issue more debt to buy more Bitcoin—this is a self-reinforcing cycle that transforms the corporate treasury into a leveraged crypto fund. The maturing debt is settled by issuing new shares, thus diluting the equity of existing shareholders. However, due to the increase in the value of the company's Bitcoin holdings, the premium on the stock price offsets this dilution.

Most companies following the footsteps of Strategy have existing businesses and hope to increase the returns on their balance sheets through Bitcoin as an appreciating asset.

Strategy was once entirely about appreciation potential, yet they did not want to bear the burden of establishing a physical business. They had no customers, no profit model, and no operational roadmap. All they needed was a balance sheet filled with Bitcoin and a shortcut through finance to quickly enter the public market. Thus, Special Purpose Acquisition Companies (SPACs) came into being.

These Bitcoin transactions can negotiate valuations in advance and package them under a shell that complies with the U.S. Securities and Exchange Commission (SEC) regulations, while avoiding being labeled as investment funds.

The SPAC route makes it easier for companies to market their strategies to stakeholders and investors, as there is nothing else to promote besides Bitcoin.

Do you remember what happened when Meta and Microsoft considered adding Bitcoin to their treasury? It was met with overwhelming rejection.

For investors in the public market, SPACs are seen as a tool that provides pure exposure to Bitcoin without the need to directly engage with cryptocurrencies. It's similar to buying a gold ETF.

SPACs indeed face challenges in adoption by retail investors, who tend to prefer more popular avenues for gaining exposure to Bitcoin, such as Exchange-Traded Funds (ETFs). A 2025 survey of institutional investors in digital assets shows that 60% of investors prefer to gain cryptocurrency exposure through registered instruments like ETFs.

Nevertheless, the demand still exists. Because this model fully utilizes the potential of leverage.

The strategy for purchasing Bitcoin does not stop at a single purchase. It continuously issues more convertible bonds, which are likely to be redeemed by issuing new shares. This method transforms a traditional business intelligence platform into a Bitcoin accelerator. During the rise in stock prices, its performance even surpassed that of Bitcoin itself. This blueprint left a deep impression on investors. SPAC-based Bitcoin companies can also provide the same acceleration effect: buying Bitcoin, then issuing more stock or debt to buy more Bitcoin. This creates a cyclical process, forming a closed loop.

When a new Bitcoin company announces it has secured a $1 billion PIPE (Private Investment in Public Equity) backed by institutional support, it showcases to the market that real capital is paying attention. For example, Twenty One Capital has gained significant market trust with the backing of heavyweight institutions like Cantor Fitzgerald, Tether, and Softbank.

SPAC allows founders to achieve this goal early in the company's lifecycle without having to first build a revenue-generating product. Early institutional backing helps attract attention, capital, and momentum, and compared to the investor resistance that publicly listed companies may face, SPACs have fewer barriers.

For many founders, the SPAC route offers flexibility. Unlike IPOs, which have stricter disclosure timelines and pricing, SPACs provide more control over narrative, forecasting, and valuation negotiations. Founders can tell a forward-looking story, create capital plans, retain equity, and avoid the cumbersome processes of traditional VC to IPO funding models.

The packaging of a SPAC is part of its appeal. Going public is a well-known language. Stock codes can be traded by hedge funds, added to retail platforms, and it is very important to know what you are actually buying and how much.