After being in the negative for the past three quarters, the popular Bitcoin bet that MicroStrategy has been offering appears to be on its way back towards becoming profitable. With Bitcoin maximalist Michael Saylor at the helm of the business, the cloud-based technology company has acquired 138,955 BTC over the course of the past three years, investing over $4 billion on the world’s first decentralized cryptocurrecy.
Microtrategy Gains As Bitcoin Rallies
Bitcoin’s value has risen by almost 73% over the past three months. This represents the largest quarterly gain in the past two years. However, the price dropped by 64% during the course of the previous year as a result of a slew of scandals and bankruptcies in the sector. On Wednesday, the price of Bitcoin reached its three month high of $29,171, which is just marginally less than the company’s average buy price of $29,817.
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It is possible that MicroStrategy will be able to avoid incurring an impairment charge and writing down the value of its holdings for the first time in ten quarters, as per a Bloomberg report. The corporation had written off around half of its Bitcoin investment by the end of the year. Saylor has increased the size of his investment on Bitcoin despite the erratic behaviour of both the share price and the value of the cryptocurrency. In order to finance its further Bitcoin acquisitions, the company even took out loans from the crypto-friendly bank Silvergate, which has since gone bankrupt.
Michael Saylor’s Big Bet On Bitcoin
In August 2020, Saylor made his first public admission that he was purchasing Bitcoin. Citing the risk of growing inflation, he argued that the digital currency was a better alternative than conventional investments like short-term Treasuries for the software company’s funds. As a result of Saylor’s decision to include Bitcoin as part of the company’s strategic goal, the small IT company has now become a prominent proxy firm for investing in cryptocurrencies. Since August of 2020, the company’s share price has increased by more than double, greatly outpacing the growth of the benchmark S&P 500 index, which was approximately 16% during the same time period.
On Monday, MicroStrategy revealed that it had added $150 million to its cryptocurrency purchases and had sold shares to cover the remaining $205 million of the loan, which was partially secured by its Bitcoin. The most recent purchase by the firm since April 2022 totaled around 6,455 tokens and was made between February 16 and March 23.
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