MicroStrategy has lost money after bitcoin fell low: a $330 million loss on paper

MicroStrategy’s large bitcoin wager has lost money after bitcoin’s price fell below the software company’s average buying price.

MicroStrategy’s stock price has fallen in recent days as a result of the larger market turmoil. On Wednesday, it finished at $168, extending the week’s loss to 45 percent.

Million-dollar loss

MicroStrategy and its companies presently own 129,218 bitcoins, which they purchased for an average of $30,700 each.

The current bitcoin price is around $28,200, resulting in a $330 million loss on paper — considering the fact that MicroStrategy hasn’t sold a single bitcoin.

After investing in bitcoin, Microstrategy and its CEO Michael Saylor have become marketers for bitcoin enthusiasm.

When Saylor told The Block that bitcoin is a superior asset for a treasury since it is deflationary by design, MicroStrategy first bought bitcoin on its balance sheet in August 2020.

MicroStrategy will continue to buy bitcoin

Saylor has remained optimistic about bitcoin since then. He recently tweeted, for example: “One item is more important than the others. #Bitcoin.”

“Gold in the twenty-first century is unrealistic,” he observed at the time. Everything boils down to one simple principle.

It will debase between 2% and 4% per year, most likely during the next few years “A thousand years.”

The problem with the dollar, according to Saylor, is monetary policy expansion and inflation, which erodes purchasing power.

MicroStrategy has also stated that it will continue to buy bitcoin regardless of price movements because it is a long-term investor.

Saylor revealed to The Block in a late-year interview that the company has two strategies: one is to grow its business software business, and the other is to “invest our excess cash flows in bitcoin, which we keep for the long term.”

$2 billion in debt

MicroStrategy’s bitcoin bets, in particular, have been backed by more than $2 billion in debt. The corporation took out multiple convertible and secured loans to purchase the bitcoin.

MicroStrategy’s subsidiary MicroStrategy, which owns the majority of the bitcoins, recently obtained a $205 million bitcoin-collateralized term loan from Silvergate Bank for purposes including bitcoin acquisition.

Saylor appears unconcerned about bitcoin’s price decline. MicroStrategy has 115,109 bitcoins to commit, he said earlier this week, adding the company “might post some additional collateral” if the price of bitcoin falls below $3,562.

On paper, MicroStrategy isn’t the only corporation experiencing bitcoin losses.

During the turmoil in the cryptocurrency market, Elon Musk’s Tesla and cash-strapped El Salvador both lost money on their bitcoin wagers.

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Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing