Largest Bitcoin Business Buyer Confirms Cryptocurrency Bet
Michael Saylor, who recently stepped down as CEO of software company MicroStrategy (MSTR) is still a strong believer in bitcoin’s resurgence.
His latest tweets show that the faith of this evangelist in the most popular cryptocurrency remains firm despite the market crash. Bitcoin (BTC) has lost nearly 68% of its value since hitting an all-time high of $69,044.77 on November 10. Currently, BTC is trading around $22,375.99, according to data firm CoinGecko.
“Just #Bitcoin,” Saylor posted to his 2.6 million Twitter followers on September 12.
The day before, he had posted an almost similar message, reaffirming his loyalty to the token.
“#Bitcoin Any Given Sunday,” the billionaire said.
Sell stocks to buy Bitcoin
If Saylor is no longer at the helm of MicroStrategy, the bitcoin strategy of the company he co-founded in 1989 has not changed. The firm plans to issue and sell up to $500 million in stock, according to a recent regulatory filing.
The company has retained the services of Cowen & Co and BTIG LLC to complete this sale, which will take place in several stages. However, MicroStrategy did not provide the dates the company intends to proceed with the transactions. What is striking is that MicroStrategy intends to use part of the money raised to continue investing in bitcoin.
“We intend to use the net proceeds from this offering for general corporate purposes, including the acquisition of bitcoin,” the company said. “As a result, our management will have broad discretion in the application of the net proceeds from this offering, and you will not have the opportunity as part of your investment decision to consider whether the net proceeds are used in a manner that you approve.”
The company goes even further by reiterating that its bet on bitcoin remains intact as many institutional investors have chosen to be wary of risky assets like cryptocurrencies at a time when the specter of recession looms.
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“We currently intend to retain all of our future earnings, if any, to purchase additional bitcoin and for the development of our business,” MicroStrategy said in its filing with the US Securities and Exchange Commission (SEC).
Tesla (TSLA) The electric car maker, which was the second largest bitcoin holder among large companies, liquidated almost its entire portfolio in the second quarter of 2022.
“We have converted approximately 75% of our bitcoin purchases to fiat currency,” the Model Y and Model 3 maker announced last July.
Write-down fee
Tesla’s bitcoin portfolio has fallen from 43,200 bitcoins at the end of the first quarter of 2022 to 10,800 bitcoins currently, according to Bitcoin Treasuries. Tesla invested $1.5 billion in virtual currency on February 8, 2021.
Tesla’s withdrawal leaves MicroStrategy as the only big name on Wall Street with tens of thousands of bitcoins on its balance sheet. As of Sept. 8, the software company’s portfolio contained 129,699 bitcoins purchased at a total price of $3.977 billion, according to regulatory filings.
In light of the drop in the price of BTC, we can therefore logically say that the losses currently amount to around $1.2 billion at last check. MicroStrategy purchased its bitcoins at an average price of $30,664 per unit.
The company said it took a $2 billion BTC-related write-down in the second quarter, which weighed on its results. In fact, MicroStrategy posted a net loss of $1.06 billion in the second quarter.
MicroStrategy shares affected by bitcoin price movements are down 52% since January.
“Our bitcoin acquisition strategy exposes us to various risks associated with bitcoin,” the firm says. “Fluctuations in the market price of bitcoin, which may be affected by highly uncertain regulatory, commercial and technical factors, and associated write-down charges that we may incur as a result of a decline in the market price of bitcoin below the value at which our bitcoins are carried on our balance sheet, which each could significantly affect the market price of our Class A shares.
