The bitcoin price has pulled off a blistering rally over the past couple of months. With the ballooning prices, MicroStrategy’s $425 million investment made in August and September is already paying off handsomely.
Data posted to Twitter by crypto researcher Kevin Rooke indicates that MicroStrategy accrued $100 million in profits from its 38,250 bitcoin treasury two months down the line than it did from its day-to-day business. For perspective, MicroStrategy made only $78 million from its business operations over the past three and a half years.
In August, US-based business intelligence firm MicroStrategy invested $250 million of its excess cash into bitcoin to preserve the value of its capital against a frail dollar. The company bought an additional $175 worth of bitcoin in September, bringing its total BTC holdings to $425 million.
It should be noted that MicroStrategy’s actual business does not have anything to do with cryptocurrency. Yet, the publicly-traded company now recognizes bitcoin as its primary treasury reserve asset, basically a hedge against inflation. At the time MicroStrategy was purchasing bitcoin, the firm’s CEO Michael Saylor described this move as “an example of MicroStrategy’s embrace of virtual technologies”.
This was a stark change of tune from Saylor’s previous opinion about the top cryptocurrency. The CEO had said seven years ago that he believed bitcoin was on the road to extinction.
It gets better. MicroStrategy’s stocks have also been on a roll since the company announced the bitcoin purchase. The company’s shares listed on NASDAQ are up 8.21% after trading hours. MSTR now has a $1.7 billion market valuation.
While MicroStrategy has huge exposure to bitcoin, owning shares of the company does not give investors indirect exposure to the cryptocurrency, a situation that most have hoped is a loophole for an exchange-traded fund (ETF).
Increasing Participation From Multi-Billion-Dollar Conglomerates
Since MicroStrategy made that bold bitcoin move, enthusiasts believed it would give other corporations the confidence to forge ahead with bitcoin investments. So far, only a few publicly-listed companies have converted their part of cash holdings to bitcoin, including Square, Mode Global Holdings, and Stone Ridge.
Bitcointreasuries.org says public corporations now hold 786,059 BTC — equivalent to $10.8 billion at current prices. While there has yet to be a large-scale exodus to cryptocurrencies, more companies could jump into bitcoin following MicroStrategy’s impressive earnings.
Meanwhile, a year ago, no one could have imagined that these high-profile companies would openly bet on bitcoin. And yet here we are. This sure marks a watershed moment for cryptocurrency.