MicroStrategy Has Rallied With Bitcoin. It Bought Crypto—and Sold Stock.
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MicroStrategy is one of the few major corporate holders of Bitcoin.
Dreamstime
MicroStrategy
stock has rallied with
Bitcoin
prices this year as the company shows no signs of stopping its cryptocurrency buying spree. With an overhanging 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 back from the CEO job last year. The group has emerged along with
Tesla
(TSLA) as one of the few public companies to hold significant amounts of digital assets in its corporate treasury, with MicroStrategy also broadening its core business to include crypto software development.
Its Bitcoin bullishness shows no signs of stopping.
The company revealed in a filing Monday that, between Feb. 16 and March 23, it accumulated approximately 6,455 Bitcoins for some $150 million in cash, at an average price of around $23,238 per coin, including fees and expenses. That brings MicroStrategy’s holding to 138,955 Bitcoins—worth around $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 overall underwater on its crypto holdings, it bought the dip amid a major rally. Bitcoin has surged from around $16,500 at the start of the year and is showing few signs of reversing course, as investors pile back into risk-sensitive assets amid expectations of more accommodative U.S. monetary policy.
There could be more buying to come. 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 up from the loan, which had been scheduled to mature in March 2025.
The prepayment was made with $5 million in cash MicroStrategy held at Silvergate as well as proceeds brought in from selling stock, the company also said in filings. The group issued and sold some $339 million worth of stock between the start of the year and March 24, using up most of the $500 million stock sale agreement it entered last year with investment banks Cowen and BTIG.
Paying off the Silvergate loan not only frees up MicroStrategy’s ties to the collapsed bank, but it also releases Bitcoin that had been held as collateral for the loan—some 34,619 Bitcoins worth around $940 million. These Bitcoin could feasibly be used for collateral for another loan to buy even more crypto.
Write to Jack Denton at jack.denton@barrons.com
