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MicroStrategy Buys $489M More of Bitcoin; Price Drop May Mean Writedown Ahead
The business-intelligence software company said that as of June 21 it holds more than 105,000 bitcoins.
MicroStrategy said Monday it bought about 13,005 bitcoins for $489 million in cash at an average price of roughly $37,617 inclusive of fees and expenses.
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- The business-intelligence software company now holds some 105,085 bitcoins, which were acquired for a total of $2.74 billion. That’s an average purchase price of $26,080 per bitcoin, inclusive of fees and expenses.
- Given MicroStrategy paid a per-coin price of $37,617, the company's purchase is already underwater with the leading cryptocurrency currently trading at about $32,000.
- Should the price of bitcoin not fully recover to the purchase price by the end of June 30, MicroStrategy will have to write the value of the newly purchased bitcoin down to the price at quarter end. Were the quarter to end right now, with bitcoin at $32,000, the value of that $489 million in bitcoin would have to be reduced about $73 million to $416 million.
- A call to MicroStrategy wasn't immediately returned.
- CEO Michael Saylor has made bitcoin acquisition a second mandate for his 32-year-old company. Its other business is developing software.
- The purchase follows MicroStrategy's raising of $500 million from the sale of debt to fund more bitcoin buying. As the company subsequently filed to sell $1 billion in shares to help buy even more of the leading cryptocurrency, we likely will see another purchase soon.
- Shares of Nasdaq-listed MicroStrategy are getting pounded today, down about 10%, as their fate are now largely tied to the price of bitcoin, which has fallen by a similar amount after China's central bank continued the nation's crackdown on crypto. The People's Bank of China said financial institutions must not provide trading, clearing and settlement for crypto transactions.
- As mentioned earlier, the price of bitcoin was trading at about $32,000, less than half its all-time high set in April.
UPDATE (June 6, 13:47 UTC): Adds stock and debt offerings, share reaction, price of bitcoin.
UPDATE (June 6, 23:23 UTC): Adds possible writedown.
Read more: MicroStrategy Raises $500M From Bond Sale to Buy More Bitcoin
Tanzeel Akhtar
Tanzeel Akhtar has contributed to The Wall Street Journal, BBC, Bloomberg, CNBC, Forbes Africa, Financial Times, The Street, Citywire, Investing.com, Euromoney, Yahoo! Finance, Benzinga, Kitco News, African Business Magazine, Hedge Week, Campden Family Office, Modern Investor, Spear's Wealth Management Magazine, Global Investor, ETF.com, ETF Stream, CIO UK, Funds Global Asia, Portfolio Institutional, Interactive Investor, Bitcoin Magazine, CryptoNews.com, Bitcoin.com, The Local, The Next Web, Mining Journal, Money Marketing, Marketing Week and more. Tanzeel trained as a foreign correspondent at the University of Helsinki, Finland and newspaper journalist at the University of Central Lancashire, UK. She holds a BA (Honours) in English Literature from the Manchester Metropolitan University, UK and completed a semester abroad as an ERASMUS student at the National and Kapodistrian University of Athens, Greece. She is NCTJ Qualified - Media Law, Public Administration and passed the Shorthand 100WPM with distinction. She does not currently hold value in any digital currencies or projects.
Kevin Reynolds
Kevin Reynolds is editor-in-chief at CoinDesk. Prior to joining the company in mid-2020, Reynolds spent 23 years at Bloomberg, where he won two CEO awards for moving the needle for the entire company and established himself as one of the world's leading experts in real-time financial news. In addition to having done almost every job in the newsroom, Reynolds built, scaled and ran products for every asset class, including First Word, a 250-person global news/analysis service for professional clients, as well as Bloomberg's Speed Desk and the training program that all Bloomberg News hires worldwide are required to take. He also turned around several other operations, including the company's flash headlines desk and was instrumental in the turnaround of Bloomberg's BGOV unit. He shares a patent for a content management system he helped design, is a Certified Scrum Master, and a veteran of the U.S. Marine Corps. He owns bitcoin, ether, polygon and solana.
