Today Michael Saylor, CEO of MicroStrategy, revealed that the company has purchased 480 more Bitcoin.
MicroStrategy has purchased an additional 480 bitcoins for ~$10.0 million at an average price of ~$20,817 per #bitcoin. As of 6/28/22 @MicroStrategy holds ~129,699 bitcoins acquired for ~$3.98 billion at an average price of ~$30,664 per bitcoin. $MSTRhttps://t.co/leQYTXn817
— Michael Saylor⚡️ (@saylor) June 29, 2022
MicroStrategy is buying another $10 million worth of Bitcoin
In total, it invested another $10 million, buying at an average price of about $20,800.
Rumors had circulated in recent weeks that the company was in the process of selling some of its BTC, or risking the forced loss-making closure of some of its open Bitcoin positions in the event of further price declines.
Instead, Saylor always said that they would not sell, and that they would not risk the forced closure of long positions even if the price fell well below $20,000.
This was the case, and now MicroStrategy owns 129,699 BTC purchased in total at an average price of about $30,600.
In total they have so far invested about $3.98 billion in Bitcoin purchases, accumulating a loss of more than 30% for now.
It is worth noting that until 8 June, the investment was in profit, or at least breaking even, and only after the further collapse on 10 June did it go into loss. So it has been about twenty days that their investment has been virtually at a loss, and since they have not yet sold any of the BTC they purchased, should the price in the future return above $30,600 their investment would move into positive territory.
The company began investing in BTC in the second half of 2020, when the price was below $12,000. It has, however, continued throughout the bull run of 2021, thereby ending up very significantly increasing its average purchase price.
MicroStrategy’s long-term goal
At the time, its investment was far into the positive, but they chose not to monetize it because they use BTC as a reserve, and not as a speculative instrument.
In fact, during the course of 2021 they even borrowed money in order to be able to buy more Bitcoin, despite the fact that they already had a lot of Bitcoin in their cash. It is these loans in particular that are their greatest risk, because not only do they have to be repaid, but they also have to be collateralized at all times and at least 100%. The collateral consists of BTC, so if the value of Bitcoin falls, so does the value of the collateral.
Many criticize Saylor’s financial strategy because it is considered overly risky. It is indeed a strategy that involves taking large risks, especially given the size of the overall investment, probably driven by the hope of potentially large gains. Indeed during 2021 such a strategy seemed to pay off handsomely, but with further purchases at decidedly high prices, and the subsequent collapse in the value of BTC, it is not proving profitable for now.
However, given that the time horizon is the long term, it remains to be seen whether it may eventually prove to be successful.