MIcrostrategy thinks their loans are helping BTC. But actually the loans are likely insurance agreements for institutions shorting BTC for billions of dollars, at the expense of MSTR shareholders.

The loan terms are that if the BTC price goes up, then the loan can be converted into MSTR stock which is basically a form of BTC for an agreed upon price, basically similar to a call option.

If the price goes down then the loan is kept as dollars, and must be repaid at some point, including potentially liquidating all of MSTR BTC holdings for cash to repay the dollar loans.

The interest rate is nearly nothing.

So the question is who would spend hundreds of millions/billions buying these types of call options?

Companies actually bullish on BTC can just buy some or use the ETF/actual-futures. However its actually quite difficult to find a safe way to short BTC without the risk of unlimited upside.

MSTR comes along and solves this problem, he doesnt need to pay much interest since the terms of the loans are so bad for MSTR holders, that these shorters are more than happy to make it seem like they are lending money, but really are purchasing insurance for their massive shorts, at the expense of MSTR shareholders.

TLDR:

1) Company shorts BTC for billions

2) Company lends money to MSTR and receives a deal:

A) BTC goes up, their loan is converted to BTC.

B) BTC goes down, the debt is dollars.

3) MSTR shareholders

A) BTC goes up, they make a little bit of money, but the rest goes to the lenders.

B) BTC goes down, the shareholders lose potentially everything. The BTC is converted to dollars and given to the lenders.