Business intelligence firm MicroStrategy has vowed to continue purchasing Bitcoin, despite cryptocurrency prices fluctuating wildly of late.
This assertion was made by Phong Le, Chief Executive Officer of MicroStrategy, while announcing the firm’s Q1 financial results Monday.
“As you all know, our strategy is to acquire and hold Bitcoin, and we plan to continue to accumulate Bitcoin over time using our excess cash and with the net proceeds of capital markets transactions,” said Le during the earnings call noting that Microstrategy’s core business is not impacted by near-term Bitcoin price fluctuations.
“We remain committed to our Bitcoin acquisition strategy with a high degree of conviction,” he added.
MicroStrategy has had a long-term focus and a risk-managed approach for its Bitcoin strategy. Since 2020 the firm has continued to purchase Bitcoin, with the most recent foray being for 1045 Bitcoins earlier last month. Microstrategy currently holds 140,000 Bitcoins with an aggregate cost of $4.2 billion or an average of approximately $29,800 per Bitcoin. This makes MicroStrategy the world’s largest publicly traded corporate holder of Bitcoin.
Le also reassured investors of the firm’s financial health, noting that it had repaid its $205 million Bitcoin-backed loan from Silvergate last year at a 22% discount. In March, MicroStrategy disclosed in a filing with the U.S. Securities and Exchange Commission that it used part of the proceeds from a $339.4 million public sale of its shares to pay back the loan.
According to Le, following the repayment, MicroStrategy recovered 34,619 Bitcoins that were serving as collateral for the loan, which is now unencumbered. As of March 31, 2023, only 11% of MicroStrategy’s total Bitcoin holdings were pledged as collateral for debt.
MicroStrategy’s decision to invest heavily in Bitcoin has been controversial, with some investors expressing concerns about the cryptocurrency’s volatility. However, Michael Saylor, now the company’s Executive Chairman, has remained bullish on Bitcoin, saying it’s “100% better than gold”. He has also argued that Bitcoin is a hedge against inflation and a safe-haven asset during economic uncertainty.
That said, despite MicroStrategy’s Bitcoin stash remaining in the red for roughly a year, its bold investment has recently paid off handsomely, with the holdings increasing in value as the cryptocurrency’s price surged in recent months. According to ‘Saylor Tracker’ a service that tracks MicroStrategy’s Bitcoin purchases, the firm’s Bitcoin stash value is currently at a loss of $203 million. That said, it remains to be seen whether Bitcoin prices can rise for those holdings to turn green or if the cryptocurrency will continue plunging.
At press time, BTC was trading at $28,762, up 2.08% in the past seven days, as per CoinMarketCap data. The largest cryptocurrency by market capitalization traded mostly flatly Tuesday, gaining only 0.53% in the past 24 hours.