The profit formula: The Masterplan of Strategy, Nakiki, and Riot Platforms for your returns

Strategy - Strategy under the microscope

The Company's latest quarterly figures are impressive. An operating profit of USD 3.9 billion and a net profit of USD 2.8 billion speak for themselves. However, this performance is almost entirely attributable to the Company's massive Bitcoin position. With over 640,000 units held and a book profit of USD 12.9 billion this year, the model is proving effective so far. Management is reaffirming its optimistic annual targets, which are based on a further rise in the cryptocurrency. For investors, this is a clear signal that the current strength is real, but it is dependent on the performance of the Bitcoin price.

The business model acts as a lever on Bitcoin. Through skillful capital raising via various share issues, the Company finances further purchases of the digital currency. In the past, this "Bitcoin flywheel" has outperformed pure investments in Bitcoin. However, this model is now under pressure. The recent price slump in Bitcoin has also pushed the Company's preferred shares well below their issue price. This could make raising new capital significantly more expensive or even more difficult, thereby calling into question the core of the growth model.

The key question for investors is one of sustainability. Dependence on rising Bitcoin prices is the biggest risk. Although the balance sheet is robust with a considerable unrealized gain on Bitcoin holdings, a prolonged bear market would weigh heavily on earnings. On the other hand, the strategic discipline in raising capital and creating new, diversified financing instruments is a positive factor. For shareholders, it is a bet that management will continue to successfully leverage its smart strategy even in more challenging conditions. The stock has lost over 60% of its value in recent weeks and is currently trading at USD 170.50.

Nakiki – Germany's new Bitcoin channel for institutional investors

While many investors are content with ETFs, an unusual company is taking the stage in Germany. Nakiki SE is transforming into the first German Bitcoin treasury company. The model is radically simple. The Company raises capital through traditional financial instruments and uses it to purchase and hold Bitcoin permanently. As a publicly traded security, it provides institutional investors with a regulated entry ticket to the crypto market, which many mandates would otherwise not allow.

Nakiki is thus closing an existing gap in the previously conservative German market. The real appeal of this approach lies in the so-called flywheel effect. If the Bitcoin price rises, the value of the Company's balance sheet increases. If the share is then listed at a premium to this balance sheet value, Nakiki can issue new shares. With this fresh capital, the Company buys more Bitcoin, which further drives up the holdings per share and potentially the share price. This self-reinforcing cycle is the blueprint of international role models and could also provide momentum in Germany. For shareholders, the volatility of Bitcoin is thus deliberately increased.

Nakiki is currently in the implementation phase. The plan is to issue a bond to acquire the first Bitcoins. At the same time, recent corrections to the half-yearly financial statements indicate a more solid operating basis than initially assumed. In the long term, management is considering investments in the Bitcoin ecosystem in order to generate stable income regardless of the price. For investors, it is a bet that the treasury model will also work within the German regulatory framework and benefit from the same leverage effects as its international counterparts. However, Nakiki has the advantage of potentially generating a more favorable purchase price due to the recent weakness of the Bitcoin price. The share is currently trading at EUR 0.586.

Riot Platforms – From Bitcoin miner to infrastructure pioneer

The more recent quarterly figures from Riot Platforms show a company in transition. Instead of relying solely on volatile Bitcoin mining, the Company is resolutely pushing ahead with its transformation into a broad-based infrastructure provider. The strategy of leveraging existing strengths in energy and space for the booming data center market is beginning to take shape.

The financial figures highlight this success. Revenue of USD 180.2 million and net income of USD 104.5 million testify to robust operating performance. The increase in efficiency in the core business is crucial. The production of 1,406 Bitcoin at moderately increased costs per unit ensured a healthy margin. The strong balance sheet, characterized by considerable Bitcoin holdings and liquid assets, also provides the necessary financial flexibility for upcoming investments.

A concrete milestone in this realignment is the start of construction of the first two buildings on the Corsicana campus with a planned capacity of 112 megawatts. This underscores that the plans are taking shape. The expansion of the site and the establishment of a specialized team show that the Company is laying the necessary foundations to survive in the highly competitive market for computing capacity. The future will show how quickly this capacity can be marketed to tenants. The share price is currently trading at USD 12.71.

In the Bitcoin world, Strategy is fully committed to rising prices with its leveraged treasury model, which is both an opportunity and a risk. As the first German Treasury company, Nakiki is paving the way for institutional investors and attempting to leverage the international flywheel effect. Riot Platforms is skillfully diversifying from a pure miner to a broader infrastructure provider, thereby strengthening its resilience.