In recent times, the value of cryptocurrency has been highly volatile, with many companies and investors expressing doubts about its long-term stability.
However, MicroStrategy, a business intelligence firm, has remained bullish on Bitcoin, pledging to continue purchasing the cryptocurrency despite its fluctuating price.
During the earnings call announcing the company’s Q1 financial results, Phong Le, MicroStrategy’s CEO, affirmed the firm’s intention to acquire and hold Bitcoin, stating that the company planned to continue accumulating Bitcoin over time using its excess cash and with the net proceeds of capital markets transactions.
MicroStrategy has a long-term and risk-managed approach to its Bitcoin strategy, having continued to purchase the cryptocurrency since 2020.
Its most recent acquisition was 1045 Bitcoins earlier last month. As of now, the company holds 140,000 Bitcoins with an aggregate cost of $4.2 billion, making it the world’s largest publicly traded corporate holder of Bitcoin, with an average cost of approximately $29,800 per Bitcoin.
MicroStrategy’s decision to invest heavily in Bitcoin has sparked controversy, with some investors expressing concerns about the cryptocurrency’s volatility.
However, Michael Saylor, the company’s Executive Chairman, has remained bullish on Bitcoin, calling it “100% better than gold.” He has also argued that Bitcoin is a hedge against inflation and a safe-haven asset during economic uncertainty.
Despite MicroStrategy’s Bitcoin stash remaining in the red for almost a year, its bold investment has recently paid off handsomely, with the holdings increasing in value as the cryptocurrency’s price surged in recent months.
According to ‘Saylor Tracker,’ a service that tracks MicroStrategy’s Bitcoin purchases, the firm’s Bitcoin stash value is currently at a loss of $203 million.
However, it remains to be seen whether Bitcoin prices will rise for those holdings to turn green or if the cryptocurrency will continue to plunge.
MicroStrategy’s commitment to its Bitcoin acquisition strategy remains unshaken, with Le reassuring investors of the company’s financial health, noting that it had repaid its $205 million Bitcoin-backed loan from Silvergate last year at a 22% discount.
In March, the company disclosed in a filing with the US Securities and Exchange Commission that it used part of the proceeds from a $339.4 million public sale of its shares to pay back the loan.
Le stated that following the repayment, MicroStrategy recovered 34,619 Bitcoins that served as collateral for the loan, which is now unencumbered. As of March 31, 2023, only 11% of the company’s total Bitcoin holdings were pledged as collateral for debt.
