MicroStrategy spends $177 million to increase its vast trove of Bitcoin

abdelaziz Fathi

Virginia-based business intelligence firm, MicroStrategy has added another 3,907 bitcoins to its strategic reserves, underscoring CEO Michael Saylor’s growing conviction in the primary cryptocurrency.  

bitcoin

The latest purchase was made for around $177 million in cash at an average price of $45,294 per coin, inclusive of fees and expenses. It was financed with the proceeds generated from a sale of MicroStrategy’s class A common stock.

As of August 23, MicroStrategy holds an aggregate of 108,992 bitcoins, which were acquired at a total cost of around $2.918 billion and an average purchase price of approximately $26,769 per bitcoin.

At the current price, Microstrategy’s bitcoins are worth more than $5.4 billion. For reference, MicroStrategy’s market cap stands at $6.97 billion as of Tuesday, meaning the company places nearly 75% of its net value in Bitcoin.

“As previously disclosed, on June 14, 2021, the Company entered into an Open Market Sale AgreementSM with Jefferies LLC pursuant to which the Company may issue and sell shares of its class A common stock, par value $0.001 per share (Shares), having an aggregate offering price of up to $1.0 billion from time to time through Jefferies,” the company said in its most recent filing with the US Securities and Exchange Commission (SEC).

In a sign of massive interest from investors, Microstrategy CEO said his company is doubling down on its cryptocurrency bet and will continue to acquire additional bitcoins.

The recent purchase comes shortly after the Nasdaq-listed business intelligence firm has posted a record loss for the second quarter as a broad crypto crash wiped out about $425 million in market value of its bitcoin holdings.

The Virginia-based corporation, spearheaded by one of bitcoin’s most vocal proponents, reported a loss of $300 million in Q2 2021, compared to a $3 million profit a year earlier.

The sluggish performance comes less than two months after MicroStrategy raised $500 million in bonds to acquire more of bitcoin. The move signaled that institutional investors are still optimistic about the future of the world’s largest cryptocurrency as it pares back losses from a massive crash in May.

The business intelligence giant had previously sold debts worth more than $2.0 billion for the explicit purpose of purchasing Bitcoin.

The last time MicroStrategy announced a large bitcoin purchase was in June, when the American firm spent roughly $489 million to acquire 13,005 bitcoins at an average price of $52,765 per bitcoin.

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