MicroStrategy’s Bitcoin holdings at a record low despite doubling down

The firm is down 50% on their initial investment.
MicroStrategy’s Bitcoin holdings at a record low despite doubling down

American business intelligence firm MicroStrategy has been on a Bitcoin buying spree since 2020. According to CEO Michael Saylor, the company’s primary objective is to use the asset as an inflation hedge.

MicroStrategy’s Bitcoin stash was valued at about $5.9 billion at the end of the first quarter. However, with Bitcoin falling over 50% since then, the holdings could now be worth around $2.7 billion, a fall of more than 55%. During the same time, the company’s share price declined by over 65%.

Technically, the value erosion would be considered a paper loss, but the company might have to take a substantial hit on impairment charges in its second quarterly earnings.

In March, MicroStrategy acquired a loan worth $204.7 billion to fund its Bitcoin purchases from digital currency-focused bank SilverGate. The leg down of Bitcoin’s price triggered talks that the company may face liquidation once Bitcoin drops below $21,000.

However, Saylor has dismissed those rumours saying:

“If bitcoin goes down by about 95%, then we would have to pledge some additional collateral.”

while adding:

“We also have other cash flows and assets… so we were prepared for the worst case.”

Last week, the company announced an additional $10 million purchase of Bitcoin below the $20,000 range, taking its tally to 129,699 in BTC with a total expenditure of about $4 billion at an average price of $30,664.

Saylor has tried to defend the cost averaging strategy of the firm by stating:

“Our strategy is simple, we acquire bitcoin, we hold bitcoin, we don’t sell bitcoin… we just happen to believe that 100 years from now, bitcoin is like manhattan and you just gonna wanna hold as many blocks of bitcoin as you can.”

Back in 2020, when the firm started purchasing Bitcoin, Saylor had called the asset a “safe haven” and an alternative to “digital gold.” Even during the crypto winter, the company is firmly convinced of the crypto’s future.

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James Satoshi
James Satoshi
James is a leader in Web3, NFTs, & DeFi with over 4 years of experience in the industry. You'll spot him covering all topics through-out Coinmash in our guides and analysis sections.