MicroStrategy loss on bitcoin bet widens to $1.5 billion
MicroStrategy has purchased additional 301 bitcoins (BTC) for about $6 million, adding to its massive cryptocurrency holdings during a sharp drop in the price.
According to an SEC filing, the Virginia-based business intelligence firm had added more bitcoins to its strategic reserves between August 2 and September 19.
The latest purchase was made in cash at an average price of $19,851 per coin, inclusive of fees and expenses.
The analytics software maker, founded 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.
With its most recent purchase, MicroStrategy holds an aggregate of 130,000 bitcoins, which were acquired at a total cost of around $3.98 billion and an average purchase price of approximately $30,639 apiece.
With bitcoin currently trading at $19,138, MicroStrategy’s crypto stash would now be worth just over $2.488 billion. That translates to an unrealized loss of more than $1.5 billion.
MicroStrategy stock crashes
MicroStrategy has been trading under pressure amid strong sell-off in crypto markets and after an unfavorable accounting ruling by the Securities and Exchange Commission.
MicroStrategy (NASDAQ:MSTR) stock is falling faster than the crypto’s price, just as it outpaced bitcoin’s climb last year. At one point in January, it fell as much as 30% over two days.
The stock lost nearly 70% of its value since it hit a record high above $1000 a year ago. Shares of business intelligence specialist and cryptocurrency investor have seen a monumental 800% during the period between October 2020 and February 2021 as bitcoin climbed.
The company was looking for new ways to generate yield on its massive crypto trove after its subsidiary raised $205 million via an interest-only term loan due 2025. Offered by the crypto-friendly bank Silvergate Capital, the fiat money was granted against a bitcoin holding worth around $820 million, which represents 12% of MicroStrategy’s total crypto holding. With 19,466 BTC held by the subsidiary pledged as collateral, the firm was looking to put its 95,643 “unencumbered” bitcoins to use in exchange for juicy yields.