MicroStrategy, a business intelligence company based in Virginia, now best known for its Bitcoin holdings, has purchased an additional 12,333 BTC for approximately $347 million, according to a statement from Michael Saylor, the company’s founder and now prominent Bitcoin evangelist, on June 27. The average price paid per Bitcoin was $28,136. This latest acquisition brings MicroStrategy’s total Bitcoin holdings to 152,333 worth over $4.5 billion based on the current Bitcoin price.
Bitcoin Beginnings
MicroStrategy made its first investment in Bitcoin in August 2020 and has been accumulating ever since. The company’s bet on Bitcoin has tied its balance sheet closely to the performance of the asset. In March 2022, MicroStrategy took out a $205 million loan from now-defunct Silvergate Bank, using 34,619 bitcoins as collateral. The loan led to concerns that if the price of Bitcoin fell too far, MicroStrategy could face a margin call. However, MicroStrategy’s Founder Michael Saylor stated that the company had enough Bitcoin to pledge as additional collateral and the concerns were unwarranted:
“MicroStrategy has a $205M term loan and needs to maintain $410M as collateral. $MSTR [MicroStrategy] has 115,109 BTC that it can pledge,” Saylor explained. “If the price of #BTC falls below $3,562, the company could post some other collateral.”
The MicroStrategy “Strategy”
In March 2023, MicroStrategy fully repaid the Silvergate loan, eliminating any worries of a margin call.
Some Bitcoin community members have voiced concerns that one entity controlling so much of the total Bitcoin supply could be problematic. However, due to Bitcoin’s proof-of-work model, the amount of Bitcoin owned does not provide any control or influence over the network. Bitcoin’s rules are determined by the code and enforced by node runners, not large holders. This starkly contrasts proof of stake, designed to replicate the legacy model. In the “traditional” system, proof of stake monetarily rewards the wealthiest participants without requiring any work from them. This setup inevitably leads to ever-increasing centralization of power in the hands of parasitic entities, eventually giving them control of the network and the power to tyrannically decide who is allowed to transact and how. This flaw is what proof of work fixes and why we need not worry about any entity “hoarding” of Bitcoin. Eventually, people may again use the word “saving” rather than “hoarding” recognizing the inherent benefits of such a strategy.
Furthermore, because MicroStrategy ($MSTR) is a public company, its assets are distributed to shareholders:
MicroStrategy Ownership Breakdown
Driving Bitcoin Interest & Adoption
MicroStrategy’s ongoing Bitcoin purchases have made it one of the largest public companies exposed to the asset. The volatility of Bitcoin frequently causes significant swings in MicroStrategy’s stock price and balance sheet. Saylor has maintained an extremely bullish stance on Bitcoin, calling it “digital gold” and the future of finance. He also maintains a website full of free Bitcoin education at hope.com. MicroStrategy’s Bitcoin buying spree is a bold bet with potentially huge upsides. The Bitcoin community watches MicroStrategy’s every move, hoping conviction and deep pockets will continue to drive mainstream interest and adoption of Bitcoin.
You can add to your own Bitcoin position by finding a Byte Federal Bitcoin ATM near you.
