Before MicroStrategy became one of the world’s biggest Bitcoin bulls, the software company was relatively unknown outside big tech and traditional finance. That changed in 2020 when the Fortune 500 enterprise added Bitcoin holdings to its balance sheet.
MicroStrategy is one of the key players in the cryptocurrency market and the wider blockchain industry. Led by chairman Michael Saylor, they were among the first corporate entities to consider BTC as a store of value. This paved the way for other notable companies, like Tesla, to make their Bitcoin purchases.
We know MicroStrategy is an avid supporter of digital currency, but what is the company behind the internet fame? Do they hold any other digital assets, like Ethereum or NFTs?
What Is MicroStrategy?
Founded by Michael Saylor in 1989, MicroStrategy is a software company that provides powerful analytics and business intelligence tools. MicroStrategy products are used by some of the world’s largest companies and household names, such as Visa and Porsche.
Of course, developing data dashboards can only take a company so far. As part of its expanded offering, MicroStrategy provides cloud computing services.
But is the relationship between MicroStrategy and Bitcoin?
MicroStrategy in the Crypto Market
According to Coingecko (as of Feb 2023), MicroStrategy owns more Bitcoin than any other public company, including some leading exchanges like Coinbase. Unfazed by events like the FTX crash and crypto bear markets, MicroStrategy sees BTC as a long-term investment.
Buying Bitcoin for the First Time
MicroStrategy first expressed interest in Bitcoin in mid-2020 as a hedge against inflation. The United States Dollar (USD) was rapidly losing value following the economic fallout of the pandemic.
In a June earnings call with the company’s CFO, Phong Le, Saylor mentioned that “it makes sense to shift our treasury assets into some investments that can’t be inflated away…”. By August 2020, MicroStrategy announced they’d acquired 21,454 BTC at a market value of over $250M. The price of BTC at the time was around $11,000.
Since then, MicroStrategy has routinely added to their bitcoin holdings, regardless of the volatility in the crypto market. As of February 2023, the tech giant’s average price of Bitcoin purchases is roughly $30,415 per BTC.
Has MicroStrategy Ever Sold Its Bitcoin?
After a challenging year for Bitcoin, mainstream media and crypto news outlets eagerly shared the trending story: MicroStrategy sells. It seemed like following the last year’s crypto winter, Saylor and Co needed to cut their losses.
Despite what the headlines suggested, MicroStrategy explained in an SEC filing that they planned “to carry back the capital losses resulting from this transaction against previous capital gains… which may generate a tax benefit.”
While this may have spread brief fear and doubt in the crypto market, MicroStrategy has since repurchased bitcoin. The company’s conviction in digital currency runs deeper than ever. Per a filing with the Securities and Exchange Commission, MicroStrategy plans to sell its other assets to fund further BTC investments.
What Is MicroStrategy’s Liquidation Price?
According to Binance, MicroStrategy’s Bitcoin investment has been partly funded by Silvergate loans. Additionally, one of the tech firm’s subsidiaries, MacroStrategy, has a leveraged position in Bitcoin.
In a significant crash, MacroStrategy would need to add additional collateral to its position to avoid liquidation. If the price of bitcoin were to drop to $13,644, Macrostrategy would receive an unwelcome margin call.
When will MicroStrategy be forced to sell? Hopefully, not anytime soon. MicroStrategy’s BTC position comes under threat of liquidation at a much lower price of around $3,561.
MicroStrategy’s Other Crypto Holdings
Despite being undoubtedly bullish on BTC and blockchain technology, MicroStrategy does not officially hold any other cryptocurrencies. Altcoins like ETH are not listed on the MicroStrategy balance sheet.
Being a bitcoin maximalist does have its drawbacks. Ironically, if MicroStrategy had bought Ethereum instead of Bitcoin, they would’ve seen better returns. By purchasing ETH, as opposed to BTC, MicroStrategy would hold 3,540,000 ETH.
MicroStrategy in the Stock Market
Adding Bitcoin to the company’s balance sheet has drawn mixed responses from MicroStrategy (MSTR) investors. Holding BTC has exposed the company’s treasury to greater volatility, which appears to coincide with the performance of the MSTR stock.
Bloomberg suggests that MSTR stock hit its lowest price since 2020 following MicroStrategy’s BTC purchases in December 2022. It’s important to note that, at that time, MicroStrategy had lost over one billion USD through its Bitcoin investments.
What Is Michael Saylor’s Role at MicroStrategy?
In August 2021, MicroStrategy co-founder and CEO Michael Saylor stepped down. Saylor remains heavily involved with the company in his new role as executive chairman. The shift gives Saylor greater flexibility to pursue MicroStrategy’s Bitcoin strategy.
Saylor’s position as CEO was replaced by the former CFO and President, Phong Le.
On the Flipside
- While some might consider MicroStrategy’s liquidation point impossible, it would surely trigger widespread panic in the crypto market. If MicroStrategy were forced to sell its BTC holdings, it could be a fatal blow to the price of Bitcoin and the reputation of cryptocurrency and blockchain.
Why You Should Care
MicroStrategy is the largest Bitcoin holder amongst corporate entities. Their belief and support of BTC and the blockchain industry represent the arrival of institutional investment into the crypto space.
This improves the image of cryptocurrency and Web 3.0 technologies in the view of both traditional finance and the general public. MicroStrategy’s investment is a step toward the mass adoption of bitcoin and blockchain technology.
How Many Bitcoins Does MicroStrategy Own?
As of February 2023, MicroStrategy owns 129,699 bitcoins. This represents approximately 0.618% of the total BTC supply. Please check Coingecko’s dedicated page on public Bitcoin holdings for up-to-date readings of this statistic.
Is MicroStrategy the Largest Holder of Bitcoin?
The largest holder of BTC is the anonymous founder of Bitcoin themself, Satoshi Nakamoto. However, MicroStrategy is the largest corporate entity and public company with BTC on its balance sheet as of February 2023.
Did MicroStrategy Sell Bitcoin?
In December 2022, MicroStrategy sold 704 BTC, marking the first time the company has sold bitcoin. The sale was made to carry back capital losses against previous capital gains. MicroStrategy remains bullish on bitcoin long term and has since repurchased BTC.
Why Does MicroStrategy Have So Much Bitcoin?
According to Michael Saylor and Phong Le, Bitcoin is a hedge against inflation. MicroStrategy’s Bitcoin investment aims to retain value on the company’s balance sheet rather than lose value to inflation.
What Did MicroStrategy Do Before Bitcoin?
Before buying bitcoin, MicroStrategy was a software company that engineered sophisticated data tools. This is still the company’s primary business.
Will MicroStrategy Be Forced to Sell Bitcoin?
MicroStrategy is expected to be issued a margin call if the spot price of Bitcoin falls to $3,561. Before then, MicroStrategy will need to add additional collateral to support its position or be forced to sell bitcoin.
How much has MicroStrategy Lost in Bitcoin?
As of February, MicroStrategy’s average purchase price is approximately $30,415 per bitcoin. At the time of writing, this puts MicroStrategy’s bitcoin investment at an unrealized loss of roughly $1B.