Company’s Bitcoin Bet Is Worth More than $10B

Saylor co-founded a company based in Tysons Corner, Virginia, with approximately $500 million invested mainly in short-term U.S. government securities before the shift in 2020. Due to the dropping yields after the pandemic, Saylor started questioning the conventional strategy he was using at the time.

Saylor is one of the most prominent cryptocurrency advocates today, and the value of MicroStrategy’s Bitcoin holdings has skyrocketed to $10 billion after the recent price rally. MicroStrategy has an unrealized gain of nearly 70% based on the cost of the Bitcoin held. 

According to MicroStrategy, the company purchased 190,000 Bitcoin at a total cost of $5.93 billion, or $31,224 each, as of February 5th. Bitcoin has seen a surge of around 25% since the beginning of this year, reaching a more than two-year high of $52,749 on Thursday.

Although Saylor has gained the admiration of digital-asset proponents, no other U.S. public company besides a few crypto-related firms and Tesla Inc. chose to hold the volatile cryptocurrency on its balance sheet.

A well-planned strategy by Microstrategy 

The company has taken advantage of the price appreciation by selling shares and issuing bonds to purchase large quantities of Bitcoin. Saylor recently stated in an interview with Bloomberg Television that MicroStrategy’s status as a Bitcoin proxy will not be affected by newly launched spot exchange-traded funds. 

The reason is that it does not charge a fee while offering a leveraged bet on the digital asset. MicroStrategy’s Bitcoin holdings are almost twice the size of the assets in BlackRock’s ETF, the most successful of the nine new funds launched last month. 

Equity investors see MicroStrategy as an easier-to-trade proxy for cryptocurrency since the company’s shares have moved in tandem with Bitcoin prices. Since Saylor’s decision to hold Bitcoin, MicroStrategy’s stock has risen more than 500% to approximately $770. It surpassed the benchmark Standard & Poor’s 500 Index’s gain of more than 0.5 times during the same period. 

In February 2021, MicroStrategy reached a high of $1,272. Moreover, the MSTR stock has seen a rally of nearly 50% in the past month. 

The Grayscale Bitcoin Trust is still the most significant crypto investment vehicle, valued at about $24 billion. However, the fund has seen outflows of almost $7 billion since its conversion from a trust. Among the 10 U.S. spot ETFs, GBTC charges investors a fee of 1.5%, which is the highest. 

Conclusion

Saylor co-founded a company that invested in short-term U.S. government securities before the pandemic hit. Due to the dropping yields, he shifted his strategy, and the company invested in Bitcoin, resulting in a rally of close to 50% in the past month.

Disclaimer

The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading stocks comes with a risk of financial loss.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages ​​and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.