MicroStrategy has teamed up with Bitcoin. It bought crypto – and sold stocks.
MicroStrategy shares have rallied
Bitcoin
prices this year as the company shows no signs of stopping its cryptocurrency buying spree. With a pending loan now paid off, investors shouldn’t be surprised to see more Bitcoin bullishness.
MicroStrategy (ticker: MSTR) is a business intelligence company founded by high-profile Bitcoin bull Michael Saylor, who now leads the group as chairman after stepping down from the CEO job last year. The group, along with Tesla ( TSLA ), has emerged as one of the few public companies to hold significant amounts of digital assets in its corporate finances, and MicroStrategy is also expanding its core business to include crypto software development.
Bitcoin bullishness shows no signs of stopping.
The company revealed in a filing Monday that between February 16 and March 23 it accumulated approximately 6,455 Bitcoins for about $150 million in cash, at an average price of about $23,238 per coin, including fees and expenses. That brings MicroStrategy’s holdings to 138,955 Bitcoins – worth about $3.8 billion at current prices – with an average purchase price of $29,817 per coin.
Bitcoin was trading around $27,000 on Tuesday, but while MicroStrategy is underwater on its crypto holdings, it bought the dip amid a big rally. Bitcoin has rallied from around $16,500 at the start of the year and shows little sign of reversing course, as investors pile back into risk-sensitive assets amid expectations of more accommodative US monetary policy.
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There may be more purchases. MicroStrategy’s filing also revealed that on March 24 it paid off a loan to Silvergate Capital
,
a crypto-focused bank that collapsed this month after facing a bank run. MicroStrategy prepaid $161 million to the bank, freeing itself from the loan, which was scheduled to mature in March 2025.
The down payment was made with $5 million in cash MicroStrategy held at Silvergate as well as proceeds raised from the sale of shares, the company also said in filings. The group issued and sold about $339 million worth of shares between the start of the year and March 24, using up most of the $500 million share sale deal it struck last year with investment banks Cowen and BTIG.
Paying off the Silvergate loan not only frees MicroStrategy’s ties to the collapsed bank, but it also frees up the Bitcoin that had been held as collateral for the loan — about 34,619 Bitcoins worth about $940 million. These Bitcoin can possibly be used as collateral for another loan to buy even more crypto.
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Write to Jack Denton at [email protected]
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