MicroStrategy Introduces BPS, CEBE Metrics to Quantify Bitcoin Amplification
MSTR•MicroStrategy's Executive Chairman outlined BPS and CEBE BPS metrics to measure Bitcoin per share before and after senior claims, naming the gap Amplification. He said high-cost, short-duration debt erodes this Amplification and underperformance risk, while low-cost, long-duration liabilities can widen it and enhance returns.
1. Introduction of BPS and CEBE Metrics
MicroStrategy's Executive Chairman introduced two metrics—BPS and CEBE BPS—to assess Bitcoin treasury company performance by measuring Bitcoin per common share before and after senior claims, respectively. He coined the divergence between these metrics as Amplification, which only arises when a company carries debt or preferred shares.
2. BPS Calculation
BPS is calculated by dividing total Bitcoin holdings by outstanding common shares without accounting for any senior liabilities. When a company has no debt or preferred stock, BPS equals CEBE BPS, meaning the stock should track Bitcoin like an ETF.
3. CEBE BPS Calculation
CEBE BPS deducts the value of debt and preferred shares from Bitcoin holdings before dividing by common shares, establishing a conservative floor value per share. This metric represents what common shareholders would receive if all liabilities were settled immediately using Bitcoin reserves.
4. Amplification and Debt Impact
The gap between BPS and CEBE BPS, termed Amplification, reflects the leverage effect of liabilities on returns. Short-duration, high-cost debt compresses Amplification and raises underperformance risk, whereas long-duration, low-cost liabilities can expand Amplification and boost shareholder upside.
