MicroStrategy Acquires Another 10,107 Bitcoins for $1.1 Billion
MicroStrategy, a leading business intelligence firm, has made headlines once again with its latest acquisition of 10,107 Bitcoins, costing approximately $1.1 billion at an average price of $105,596 per Bitcoin, as disclosed in an 8-K filing with the Securities and Exchange Commission. With this purchase, MicroStrategy now possesses a total of 471,107 Bitcoins, valued at over $46 billion, which they acquired at an average price of $64,511 per coin, amounting to a total cost of around $30.4 billion.
The news of this purchase comes this morning as the price has fallen below $100K due to other market forces. The firm's significant holding represents more than 2.2% of the total 21 million Bitcoins in existence, underlining MicroStrategy's position as a major corporate holder of the cryptocurrency. This latest acquisition was financed through the sale of 2,765,157 shares of MicroStrategy stock, also valued at $1.1 billion. As of January 26, there remains approximately $4.35 billion worth of shares available for sale under the company's "21/21 plan," which aims to raise $42 billion through equity and fixed-income securities to further their Bitcoin strategy.
In a move to support its aggressive Bitcoin acquisition strategy, shareholders recently voted to expand the company's authorized Class A common stock and preferred stock, providing MicroStrategy with the flexibility to continue buying more Bitcoin. Additionally, the firm decided to redeem $1.05 billion of its 2027 convertible notes using company shares, a strategy possibly aimed at reducing debt and encouraging noteholders to convert to equity, especially in light of new accounting rules and tax considerations introduced by recent legislation.
This continuous investment in Bitcoin has not been without its challenges. Over the past twelve weeks, MicroStrategy has consistently added to its Bitcoin reserves, with notable purchases including 11,000 Bitcoins last week for about $1.1 billion and $243 million worth the week prior. The relentless buying reflects a strategic commitment to Bitcoin as a key asset, yet it has also led to a premium valuation of MicroStrategy's stock compared to its Bitcoin net asset value. This has sparked some concern among investors regarding the sustainability and financial strategy behind these acquisitions.
Despite these concerns, MicroStrategy shares have seen a significant increase, rising by more than 681% over the last year. However, the stock experienced a 5.2% drop to close at $353.67 on the previous Friday and was down 5.6% in pre-market trading on Monday, reflecting the volatile nature of investing in a company so heavily leveraged to the performance of cryptocurrency. This scenario paints a complex picture of MicroStrategy's market position, where its aggressive Bitcoin strategy continues to be both a point of strength and a source of market scrutiny.