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MicroStrategy Buys More Bitcoin: What You Need to Know
MicroStrategy, the largest independent publicly-traded business intelligence company, has announced that it has purchased an additional 3,000 bitcoins for $155 million in cash, at an average price of $51,667 per bitcoin, inclusive of fees and expenses1. And now BTC has crossed $60K with a rapid growth.
JUST IN: MicroStrategy buys an additional 3,000 #Bitcoin ($155 million).
— Watcher.Guru (@WatcherGuru) February 26, 2024
This is the latest in a series of bitcoin acquisitions by the company, which now holds a total of 193,000 bitcoins, worth over $9.9 billion at current prices2.
In this article, we will explore what this development means for MicroStrategy, its shareholders, and the bitcoin market.
Why is MicroStrategy Buying Bitcoin?
MicroStrategy has been one of the most vocal and active corporate advocates of bitcoin, the leading cryptocurrency by market capitalization.
The company’s CEO, Michael Saylor, has repeatedly expressed his bullish views on bitcoin as a store of value and a hedge against inflation, and has encouraged other companies to follow his example and adopt bitcoin as a treasury reserve asset3,4.
MicroStrategy’s bitcoin strategy consists of two main components: (1) growing its enterprise analytics software business to promote its vision of Intelligence Everywhere and (2) acquiring and holding bitcoin, which it views as a dependable store of value supported by a robust, public, open-source architecture untethered to sovereign monetary policy5.
MicroStrategy has acquired an additional 3,000 BTC for ~$155 million at an average price of $51,813 per #bitcoin. As of 2/25/24, @MicroStrategy now hodls 193,000 $BTC acquired for ~$6.09 billion at an average price of $31,544 per bitcoin. $MSTR https://t.co/micudbYf3P
— Michael Saylor⚡️ (@saylor) February 26, 2024
The company has been using its cash flow from operations, as well as proceeds from various capital raising activities, such as convertible notes and equity offerings, to fund its bitcoin purchases.
Since August 2020, when it made its first bitcoin purchase of 21,454 bitcoins for $250 million6, MicroStrategy has been steadily increasing its bitcoin holdings, as shown in the table below:
| Date | Number of Bitcoins Purchased | Purchase Price (in millions) | Average Price per Bitcoin |
|---|---|---|---|
| August 11, 2020 | 21,454 | $250 | $11,653 |
| September 14, 2020 | 16,796 | $175 | $10,427 |
| December 4, 2020 | 2,574 | $50 | $19,427 |
| December 21, 2020 | 29,646 | $650 | $21,925 |
| January 22, 2021 | 314 | $10 | $31,808 |
| February 2, 2021 | 295 | $10 | $33,810 |
| February 24, 2021 | 19,452 | $1,026 | $52,765 |
| March 1, 2021 | 328 | $15 | $45,710 |
| March 5, 2021 | 205 | $10 | $48,888 |
| June 21, 2021 | 13,005 | $489 | $37,617 |
| September 13, 2021 | 5,050 | $243 | $48,099 |
| October 27, 2021 | 9,000 | $414 | $46,000 |
| February 26, 2024 | 3,000 | $155 | $51,667 |
| Total | 193,000 | $5,932 | $30,742 |
Source: MicroStrategy press releases5
What are the Benefits and Risks of MicroStrategy’s Bitcoin Strategy?
MicroStrategy’s bitcoin strategy has been praised by some analysts and investors as a visionary and bold move that could generate significant returns and value for the company and its shareholders in the long term. Some of the potential benefits of MicroStrategy’s bitcoin strategy are:
- Exposure to a high-growth asset: Bitcoin has been one of the best-performing assets in the past decade, with an annualized return of over 200% since its inception in 20097.
Bitcoin’s price has increased by over 400% in the past year alone, reaching an all-time high of over $66,000 in October 2021.
MicroStrategy’s bitcoin holdings have appreciated by over 66% since its first purchase, and are now worth more than three times its market capitalization2. - Diversification and protection: Bitcoin offers a way for MicroStrategy to diversify its portfolio and protect its cash from the risks of currency devaluation, inflation, and negative interest rates.
Bitcoin has a limited supply of 21 million coins, which makes it scarce and deflationary, unlike fiat currencies that can be printed and debased by central banks.
Bitcoin also has a low correlation with other asset classes, such as stocks, bonds, and commodities, which means it can reduce the overall volatility and risk of MicroStrategy’s portfolio. - Competitive advantage and innovation: By adopting bitcoin as a treasury reserve asset, MicroStrategy has positioned itself as a leader and innovator in the business intelligence industry, as well as the broader corporate world.
MicroStrategy has gained a competitive edge over its rivals, such as Oracle, SAP, and IBM, by leveraging the advantages of bitcoin, such as its global accessibility, security, transparency, and efficiency.
MicroStrategy has also demonstrated its ability to adapt and evolve with the changing technological and economic landscape, and has attracted the attention and support of many bitcoin enthusiasts, investors, and customers.
However, MicroStrategy’s bitcoin strategy is not without risks and challenges. Some of the potential drawbacks and pitfalls of MicroStrategy’s bitcoin strategy are:
- Volatility and uncertainty: Bitcoin is a highly volatile and speculative asset, which means it can experience significant price fluctuations and swings in both directions.
Bitcoin’s price is influenced by various factors, such as supply and demand, market sentiment, regulatory developments, technological innovations, and geopolitical events, which are often unpredictable and beyond MicroStrategy’s control.
Bitcoin’s price can also be affected by market manipulation, hacking, fraud, and theft, which could result in losses or impairments for MicroStrategy. - Regulatory and legal hurdles: Bitcoin operates in a largely unregulated and decentralized environment, which poses various regulatory and legal challenges and risks for MicroStrategy.
Bitcoin’s legal status and treatment vary across different jurisdictions, and are subject to change and uncertainty.
MicroStrategy may face regulatory scrutiny, investigations, audits, fines, sanctions, or lawsuits from various authorities, such as the Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), the Financial Crimes Enforcement Network (FinCEN), or the Department of Justice (DOJ), for its bitcoin activities.
MicroStrategy may also encounter difficulties or restrictions in transferring, converting, or reporting its bitcoin holdings, depending on the applicable laws and regulations. - Operational and technical issues: Bitcoin relies on a complex and evolving technology, which requires a high level of expertise and resources to manage and maintain.
MicroStrategy may encounter operational and technical issues, such as system failures, network disruptions, cyberattacks, human errors, or software bugs, that could compromise the security, functionality, or availability of its bitcoin holdings.
MicroStrategy may also face challenges or costs in integrating, upgrading, or adapting its bitcoin technology with its existing systems, platforms, or processes.
What are the Implications of MicroStrategy’s Bitcoin Strategy for the Bitcoin Market?
MicroStrategy’s bitcoin strategy has had a significant impact on the bitcoin market, both directly and indirectly. Some of the implications of MicroStrategy’s bitcoin strategy for the bitcoin market are:
- Increased demand and scarcity: MicroStrategy’s bitcoin purchases have increased the demand and reduced the supply of bitcoin in the market, which has contributed to the upward pressure on bitcoin’s price.
MicroStrategy’s bitcoin purchases have also increased the scarcity and attractiveness of bitcoin, as the company has indicated that it intends to hold its bitcoin for the long term, and not sell or trade them for other assets. - Enhanced credibility and adoption: MicroStrategy’s bitcoin purchases have enhanced the credibility and adoption of bitcoin as a legitimate and viable asset class, especially among institutional and corporate investors.
MicroStrategy’s bitcoin purchases have also inspired and influenced other prominent companies, such as Tesla, Square, PayPal, and Twitter, to adopt bitcoin in various ways, such as buying, accepting, or offering bitcoin services.
MicroStrategy’s bitcoin purchases have also increased the awareness and education of bitcoin among the general public and the media, and have sparked more interest and curiosity in the cryptocurrency space. - Improved innovation and competition: MicroStrategy’s bitcoin purchases have improved the innovation and competition in the bitcoin market, as the company has been actively involved in developing and supporting various bitcoin-related initiatives, such as the Bitcoin Mining Council, the Bitcoin for Corporations program, and the MicroStrategy World conference.
MicroStrategy’s bitcoin purchases have also encouraged and challenged other players in the bitcoin market, such as exchanges, custodians, brokers, and miners, to improve their products, services, and standards, in order to meet the growing and evolving needs and expectations of MicroStrategy and other bitcoin investors.
Conclusion
MicroStrategy’s bitcoin strategy is a bold and visionary move that has made the company one of the largest and most influential corporate holders of bitcoin in the world. MicroStrategy’s bitcoin strategy has also generated significant benefits and value for the company.
Your point of view caught my eye and was very interesting. Thanks. I have a question for you.
Your point of view caught my eye and was very interesting. Thanks. I have a question for you.