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Microstrategy Proceeding to Buy More Crypto: Unusual or Smart Move?


cryptoknowmics.com 19 May 2022 00:16, UTC
Reading time: ~3 m

“MicroStrategy is the only Bitcoin spot exchange fund in the United States.” This was a statement MicroStrategy CEO Michael Saylor made at the Bitcoin 2022 conference in Miami. He also stated that “we are comparable to our nonexistent spot ETF.” The SEC approved ETFs that track futures contracts. However, they haven’t authorized the use of digital currency.  This allows investors to invest in Bitcoin without signing up on an exchange, creating a cryptocurrency wallet, or handling complications associated with Bitcoin. “If a spot ETF existed, its fee ratio would be 1%, and it would not employ leverage. “We use MicroStrategy to convert cash flows of software companies into Bitcoin.” Saylor indicates that the tax-free profit of the MicroStrategy Bitcoin spot ETF is between 4% and 5%. Saylor founded MicroStrategy in 1989, and they have been adding Bitcoin to their balance sheet for the past two years. The company has spent close to $4 billion on Bitcoin, which costs an average of $30,700 per unit.

Normalizing Bitcoin-backed Finance

 MicroStrategy added Bitcoin to its balance sheet in August 2020, which wasn’t so popular then. The coin was worth around $11,000 at the time. Institutional investors and Wall Street companies were sceptical of digital assets at the time. However, they later thought Saylor’s made a wise decision. The price of Bitcoin increased dramatically in October 2020. This made fund managers like Stanley Druckenmiller begin to purchase Bitcoin. MassMutual’s insurance company invested hundreds of millions of dollars into Bitcoin.

How Michael Saylor Rebooted His Career By Buying Bitcoins

MicroStrategy’s CEO is famous for the fact that he lost $6 billion in a day during the dot-com bubble when his software company almost went bankrupt. Saylor is at the center of a heated debate twenty years later because he was the first to use Bitcoin. He has spent most of MicroStrategy’s money and the majority of its debt to buy over 100,000 Bitcoins, which are currently worth billions of dollars. He shows no signs of slowing down his shopping spree any time soon. Even though other tech titans, such as Tesla’s Elon Musk and Square’s Jack Dorsey, invested their company’s funds in cryptocurrencies, Saylor is the only one who has tied his company’s success to Bitcoin. According to analyst Kamil Mielczarek, Microstrategy’s main products account for only 20% of the company’s value. Saylor’s reemergence as a bearded crypto king is one of the most intriguing comeback stories in the tech industry. It’s an odd second act and a striking example of how populist forces change business rules.  Insider spoke with some former employees who worked with the executive, friends, analysts, investors, and corporate governance experts. They had to determine whether the executive’s high-stakes Bitcoin bet was a stroke of genius or a reckless habit. The responses were outrageous as the employees explained they believe Bitcoin has a bright future, and investing in the cryptocurrency will benefit them and the company in years to come.

How Many Bitcoins Does Microstrategy Have Presently?

MicroStrategy bought approximately 4,167 Bitcoins through its wholly-owned subsidiary MacroStrategy LLC between February 15, 2022, and April 4, 2022, for approximately $190.5 million in cash or approximately $45,714 per Bitcoin on average apart from fees and costs. According to the company, MicroStrategy and its subsidiaries owned approximately 129,218 Bitcoins on April 4, 2022. “When they factored in fees and other costs, they bought these Bitcoins for approximately $3.97 billion. So, the company claims to own 115,110 Bitcoins or 89 percent of these coins.

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