MicroStrategy, the business intelligence and software company, has made headlines once again with its latest acquisition of Bitcoin. The company has purchased an additional 11,931 BTC for approximately $786 million, further solidifying its position as the largest corporate holder of the cryptocurrency.
Key Takeaways
- MicroStrategy acquired 11,931 Bitcoin for $786 million.
- The purchase was funded through the sale of convertible notes.
- The company now holds a total of 226,331 Bitcoin.
- The average purchase price for the Bitcoin is $36,798 per coin.
- MicroStrategy’s Bitcoin holdings are valued at nearly $15 billion.
Details of the Purchase
MicroStrategy’s latest Bitcoin acquisition was completed between April 27 and June 19, 2024. The company used proceeds from a recent $800 million convertible note offering to fund the purchase. This offering was initially set at $500 million but was upsized due to high demand.
The convertible notes have a 2.25% coupon and a 35% conversion premium over the U.S. composite volume-weighted average price of MicroStrategy’s class A common stock. The net proceeds from the offering amounted to approximately $786 million, which was used to buy the Bitcoin.
Historical Context
MicroStrategy first entered the Bitcoin market in August 2020 with an initial investment of $250 million. Since then, the company has consistently added to its Bitcoin holdings, making it a key player in the cryptocurrency market. The company’s strategy has been to use Bitcoin as a reserve asset, an alternative to holding cash.
Financial Impact
The company’s total Bitcoin holdings now stand at 226,331 BTC, acquired at an aggregate purchase price of approximately $8.33 billion. With Bitcoin’s current price hovering around $66,000, the total value of MicroStrategy’s Bitcoin holdings is nearly $15 billion. This gives the company an 80% paper gain on its investment.
MicroStrategy’s aggressive Bitcoin buying strategy has also had a significant impact on its stock price. Since the company began purchasing Bitcoin, its shares have risen roughly ten-fold. The stock is currently trading at around $1,507, up 2% in pre-market trading.
Market Reactions
Despite the massive size of the recent purchase, it had little impact on the Bitcoin market, as it was mostly priced in after the firm upsized its debt sale. However, the move has drawn criticism from some financial commentators, who argue that MicroStrategy’s strategy of selling debt to buy Bitcoin is risky.
Future Outlook
MicroStrategy shows no signs of slowing down its Bitcoin acquisition strategy. The company has repeatedly tapped the debt market to fund its purchases and is likely to continue doing so. With Bitcoin’s price continuing to rise, MicroStrategy’s investment strategy could pay off handsomely in the long run.
In summary, MicroStrategy’s latest Bitcoin purchase further cements its position as a major player in the cryptocurrency market. The company’s bold strategy of using debt to fund its Bitcoin acquisitions has paid off so far, and it will be interesting to see how this approach evolves in the future.
Sources
- MicroStrategy Buys $786 Million More in Bitcoin With Note Proceeds, Yahoo Finance.
- Michael Saylor’s MicroStrategy Acquires 11.9K More Bitcoin for $786M, CoinDesk.
- MicroStrategy Bought 11,931 More Bitcoin For $786 Million – Bitcoin Magazine – Bitcoin News, Articles and Expert Insights, Bitcoin Magazine.
- MicroStrategy completes $800M note offering to buy more Bitcoin, Cointelegraph.
- MicroStrategy’s Enormous Bitcoin Purchase Announced by Michael Saylor: Details, U.Today.
