MicroStrategy buys 12K bitcoins, grows bet to $4.5 billion

abdelaziz Fathi

MicroStrategy has purchased another $347 million of Bitcoin, adding to its massive cryptocurrency holdings during a sharp drop in the price.

Microstrategy CEO

The Virginia-based business intelligence firm had added another 12,333 bitcoins to its strategic reserves at an average cost of $29,668 per coin, inclusive of fees and expenses. MicroStrategy made its Bitcoin purchases between April 27 and June 27. To finance these acquisitions, the company partially relied on the issuance of new stock.

The analytics software maker, led by bitcoin bull Michael Saylor, has taken advantage of any price drop in Bitcoin to continue beefing up its investment in the world’s most-traded cryptocurrency.

This strategy, however, turned out to be a risky gamble. By the end of Q1 2022, MicroStrategy’s Bitcoin holdings were valued at approximately $5.9 billion. However, since then, the value has declined by around 22%. Throughout its venture into Bitcoin starting in 2020, MicroStrategy’s stock price has frequently mirrored the fluctuations in Bitcoin’s price.

In July 2020, prior to MicroStrategy’s Bitcoin buying spree, the company’s shares traded at approximately $123. The stock reached its peak of $1,272 in February 2021. As of Wednesday morning, the stock was trading around $322.

With its most recent purchase, MicroStrategy holds an aggregate of 152,333 bitcoins, which worth around $4.52 billion and an average purchase price of approximately $29,668 apiece.

Microstrategy is no longer underwater on its bold bet on Bitcoin as the world’s largest cryptocurrency breached the key $31,000 level for the first time in 11 months.

With Bitcoin soaring 6.2% over the past week, MicroStrategy’s Bitcoin investment has turned profitable after the recent surge in the primary crypto asset’s price.

Michael Saylor reiterated that MicroStrategy has no plans to sell any of its bitcoin holdings anytime soon, despite facing the potential liquidation of a portion of its holdings in December.

Also in March, MicroStrategy prepaid the $205 million bitcoin-backed loan it took out from insolvent crypto-focused Silvergate Bank a year earlier. The aggressive bitcoin investor says it paid the remaining principal on its loan at a substantial discount.

While MicroStrategy’s Bitcoin bet paid off handsomely when cryptocurrencies surged to record highs in late 2020 and early 2021, it has also drawn criticism after the prices dropped sharply amid a prolonged ‘crypto winter’. Up until now, investors and analysts have been expressing concern over the risks associated with such a large allocation to a volatile and speculative asset.

Despite the risks, MicroStrategy has doubled down on its Bitcoin bet, with Saylor stating in a recent earnings call that the company plans to continue to hold Bitcoin as its primary treasury reserve asset and may even consider borrowing against its Bitcoin holdings to finance future investments.

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