Published
2 years ago on
April 15, 2022
Table of Contents
- BTC Splurge To Continue
- A Significant Profit
- Other Companies Not Following MicroStrategy’s Lead?
- Productive Collateral
- Bullish Despite Uncertainty
After purchasing significant amounts of BTC in recent months, it looks like MicroStrategy is in no mood to rein in its splurge, with CEO Michael Saylor stating that the company intends to pursue its reserve assets strategy.
BTC Splurge To Continue
What does MicroStrategy’s intent to continue its reserve asset strategy mean? It means that the firm will not be taking a break from buying and hodling Bitcoin anytime soon. MicroStrategy’s CEO Michael Saylor outlined this intent in a letter addressed to investors.
According to data from Bitcoin Treasuries, MicroStrategy is the world’s largest single wallet holder of BTC, currently in possession of 129,218 BTC. Currently, MicroStrategy’s BTC holdings value is around $5.1 billion, after the firm bought a further 4197 more BTC on the 5th of April.
Compared to MicroStrategy’s holdings, Tesla, the second-largest holder of BTC, owns around 43,200 BTC, valued at around $1.7 billion.
A Significant Profit
Saylor praised MicroStrategy for being an early mover in adding BTC to its treasury in the company’s 2022 Proxy Statement, which it had filed with the SEC on the 14th of April. He further stated that adding BTC to its holdings added significant value to customers and shareholders.
Saylor further stated in the letter that MicroStrategy had paid only around $3.9 billion for the BTC it holds, implying that it had a profit margin of $1.2 billion. The letter also revealed that the company’s BTC holdings were well in the green. However, it also made it difficult for company executives to obtain liability insurance, leading to Saylor providing it out of his own pocket.
Other Companies Not Following MicroStrategy’s Lead?
It’s interesting to note that given MicroStrategy’s bullishness around BTC, other companies have not followed the firm’s lead. This could boil down to the fact that Saylor owns 68.1% of MicroStrategy, giving him a free run in deciding the company’s course, in this case, its BTC holdings. The MicroStrategy CEO has been among Bitcoin’s most vocal backers since 2020.
Productive Collateral
MacroStrategy, a subsidiary of MicroStrategy, had obtained a loan of $205 million from Silvergate bank. The loan was secured by BTC held in MacroStrategy’s collateral account. After securing the loan, MacroStrategy stated that it would be using the loan to purchase BTC, pay certain fees related to the loan, and handle general expenses.
“MacroStrategy, a subsidiary of MicroStrategy, has closed a $205 million Bitcoin-collateralized loan with Silvergate Bank to purchase #BTC.”
Speaking about the loan, Saylor stated,
“The SEN Leverage loan gives us an opportunity to further our position as the leading public company investor in Bitcoin. Using the capital from the loan, we’ve effectively turned our Bitcoin into productive collateral, which allows us to further execute against our business strategy.”
Bullish Despite Uncertainty
The uncertainty in global markets thanks to the war in Ukraine, inflation, and high-interest rates have not deterred the likes of Saylor’s MicroStrategy and Do Leon’s Terra, which have bought millions of dollars worth of BTC. This staggering purchase of Bitcoin has also gone a long way in maintaining confidence in the price of BTC.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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