MicroStrategy, a publicly traded business intelligence firm, has increased its Bitcoin (BTC) holdings after purchasing 13,005 coins for approximately $489 million (£351.94 million). The company unveiled this news through a press release on June 21, noting that it purchased these coins at an average price of $37,617 (£27,073.14) per coin, including all fees and expenses. This purchase has pushed the company’s BTC holdings upwards of 105,000coins, which are now worth more than $3 billion (£2.16 billion).
According to the press release, the firm currently has approximately 105,085 BTC, which it purchased for $2.741 billion. Per MicroStrategy, its BTC trove is currently worth $26,080 per coin. This massive purchase comes after the company completed the sale of $500 million worth of senior banknotes. At the moment, MacroStrategy, MicroStrategy’s subsidiary holds about 92,079 BTC.
While this purchase has helped bolster MicroStrategy’s BTC holdings, the company’s stock (MSTR) has not reflected this purchase. The stock is currently changing hands at $583.67 (£420.07) after shedding 9.71% of its value over the past 24 hours. BTC is also performing deplorably after slipping 4.5% over the past day and 21.66% over the last seven days to trade at $31,321.56 (£22,542.28).
Michael Saylor continues touting BTC
This news comes after MicroStrategy announced that it intends to sell $1 billion (£0.72 billion) worth of its Class A Common stock to purchase more BTC. In a recent interview, Michael Saylor said the company made massive profits from its BTC business in Q1 2021. According to him, holding BTC has increased the power of the MicroStrategy brand by a factor of 100. On top of this, he said that the firm had the best software quarter over the past ten years.
The company’s stock peaked on February 9, where it traded above $1,300 (£935.54). Since then, it has been on a steady decline, forcing the firm to disclose that it might suffer an impairment of at least $284.50 million (£201.15 million) in the quarter ending June. However, this did not prevent the company from going forward with purchasing more BTC.
While Saylor claims that the company’s investors consider holding cash on its balance sheet as a liability, the decision to put all the firm’s money in BTC has become a controversial subject. Although doubling down on the leading cryptocurrency made the company profits, this move has been bashed by critics who believe the firm is irresponsible.One such person is Marc Lichtenfeld, the Chief Income Strategist at Oxford Club, who believes MicroStrategy’s decision to hold all its cash in BTC is a breach of fiduciary duty. According to him, borrowing $400 million (£282.64 million) after taking a significant loss this quarter is irresponsible of the company. Lichtenfeld went on to note that MicroStrategy is borrowing the funds to gamble on a volatile asset instead of growing its business.