Key Insights
- MicroStrategy purchased an additional 11,000 BTC for a whopping $1.1 billion on 19 January.
- This move has now increased its average Bitcoin purchase price across all of its holdings to $63,610.
- Bitcoin now trades at around $101,500 at the time of writing, which means that the company’s holdings are worth around $47 billion.
- Only last year, MicroStrategy announced plans to raise $42 billion over three years, with an additional $2 billion expansion earlier this year.
- Despite criticism, the success of this initiative remains to be seen.
MicroStrategy has become one of the largest Bitcoin supporters under the leadership of its Executive Chairman, Michael Saylor.
Over the last few years, this company has become the largest Bitcoin holder among public companies—and it is showing no signs of slowing down.
In its latest move this week, the company purchased an additional 11,000 BTC for a whopping $1.1 billion on 19 January.
This marks the company’s eleventh consecutive week of buying Bitcoin, and now brings its holdings to an impressive 461,000 BTC.
Breaking Down the Numbers
MicroStrategy’s most recent Bitcoin-buy came at an average price of around $101,191 per Bitcoin.
According to data from SaylorTracker, this move has now increased its average Bitcoin purchase price across all of its holdings to $63,610—meaning that the company is strongly in profit.
Bitcoin now trades at around $101,500 at the time of writing, which means that the company’s holdings are worth around $47 billion.
Saylor himself hinted at the purchase with a cryptic tweet on Sunday, which read, “Things will be different tomorrow.”
Since then, Saylor has been engaging with notable figures like Eric Trump, David Sacks, and Robert Kennedy Jr..
These moves have even further fueled discussions about what MicroStrategy’s ambitious Bitcoin strategy could entail.
How Does The Company Pay For All This Bitcoin?
MicroStrategy has bought tens of billions of dollars worth of Bitcoin over the last four years.
But how does the company keep paying for all this?
MicroStrategy reportedly relies on issuing and selling its own shares to fund these purchases.
Only last year, it announced plans to raise $42 billion over three years by selling these shares, with an additional $2 billion expansion earlier this year.
The firm’s shareholders are set to vote on a proposal to increase authorized shares of Class A common stock from 330 million to 10.3 billion.
They will also vote on increasing preferred stock from 5 million to 1 billion.
In essence, if these proposals are approved, MicroStrategy’s Bitcoin holdings will rally further to the upside.
MicroStrategy itself will be able to finance further purchases using equity sales.
Notably, the company currently has around $5.42 billion in equity under its capital plan.
The Challenges That MicroStrategy Has Faced
This switch from being a software company to a full-time Bitcoin investor has directed much criticism at MicroStrategy.
Some investors have expressed concerns about the risks of using debt to finance Bitcoin purchase.
Critics have also pointed towards the serious issues that could arise if Bitcoin’s price were to crash sharply anytime soon.
Despite these issues, however, MicroStrategy continues to buy, and has even inspired other publicly listed companies (like Marathon Digital) to do the same.
The company’s heavy Bitcoin investments have also made it a proxy for Bitcoin’s price movement, with its stock price closely mirroring Bitcoin’s swings.
What Has The Market Impact Been?
So far, the company’s stock price has dipped by around 7% during the trading hours between 22 and 23 January.
However, it has recovered so far, and is trading at around a 3% dip according to data from Google Finance.
Over the past year, MicroStrategy’s stock has surged by more than 690%, showing the bullish momentum of the crypto market.
The market itself is currently in a consolidation phase, with Bitcoin back to testing the $101,000 price level.
As the company continues to buy more Bitcoin, it is becoming a beacon for other firms looking to follow in its footsteps.
The success of MicroStrategy’s efforts remain to be seen, as Saylor and his team continue to etch their names into the history of Bitcoin adoption.
