MicroStrategy’s $150 Million of Bitcoin Buys Catch Rally, Jump 18%
MicroStrategy added $150 million worth of bitcoin to its holdings at an average price per coin of $23,238 in February and March, generating an 18% gain in recent weeks. The Tysons Corner, Virginia-based company sold equity to pay for crypto and also to clear debt to Silvergate Bank.
The business software maker and bitcoin investor also released 34,619 bitcoins (BTC) of collateral used to back a $161 million term loan, according to a filing with the US Securities and Exchange Commission, by repaying Silvergate, the crypto-focused bank based in La Jolla, California which is liquidating its business after a run on deposits. The floating rate loan was scheduled to mature in March 2025 and had an interest rate of 8.27% per annum from Friday, when the payment was made.
The latest purchases of 6,455 bitcoins brought MicroStrategy’s holdings to around 138,955 BTC, worth $4.14 billion and purchased at an average price of approximately $29,817 each. BitcoinBTC is currently listed at $27,513, up 66% for the year, with much of the increase coming after March 11. The MicroStrategy purchases were between February 16 and March 23.
Silvergate’s closure, announced on March 9, and subsequent runs at Silicon Valley Bank and Signature Bank first depressed cryptocurrencies, but then gave them a boost — especially bitcoin — as the U.S. government assured depositors would be repaid and investors apparently felt the Federal Reserve’s campaign to raise the interest rate. would be limited by concerns about weakness in other banks.
That could benefit bitcoin in two ways from a dollar-based perspective: The rising interest rates made traditional money market investments more attractive than direct holdings in crytpo, and a reduced tightening cycle could leave inflationary pressures in the economy, positive for the owners of the native cryptocurrency.
MicroStrategy has been a long-term bitcoin bull under co-founder and former CEO Michael Saylor. In August, he relinquished leadership of the company’s business analytics department to concentrate on bitcoin strategy as executive chairman. At the time, the company’s bitcoin holdings totaled $1.9 billion.
In September, MicroStrategy entered into an agreement with Cowen and BTIG to sell up to $500 million of its equity to the two firms at current market prices, less a 2% commission. The filing on Monday revealed that MicroStrategy raised $339.4 million from such sales between January 1 and March 24, and issued 1.3 million shares.
That works out to about $252 per share and represents about 12% of the outstanding 11.3 million shares of Class A and B stock that the company reported for the end of last year. Class A shares were trading at $232.22 at midday Monday, down 9.5% for the day, possibly due to the dilution.
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