Software company MicroStrategy has been aggressively raising capital to invest in bitcoin since 2020. In recent weeks, the company acquired an additional 18,300 bitcoin (BTC) for about $1.11 billion. Michael Saylor's firm now owns over 1% of the total bitcoin supply.
In August 2020, MicroStrategy announced that it had acquired 21,454 bitcoins for $250 million as part of its new investment strategy. After considering various assets, the company concluded that bitcoin would be the best long-term investment. Since then, the IT company has transformed itself into a quasi-hedge fund. While its core business remains business intelligence, MicroStrategy has invested all of its corporate capital - including billions in debt financing - in bitcoin.
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Largest Investment Since 2021
MicroStrategy purchased the most recent tranche of bitcoin between August 6 and September 12, according to a filing with the U.S. Securities and Exchange Commission (SEC). At an average price of $60,600, the company purchased an additional 18,300 bitcoins. This is the largest investment since February 2021. MicroStrategy now owns around 244,800 Bitcoins, valued at approximately $14 billion. With a total supply of 21 million, the company holds 1.16% of all coins that will ever exist.
The software maker acquired its bitcoin for a total purchase price of about $9.45 billion, with an average purchase price of about $38,585, according to the filing. This means that MicroStrategy is sitting on an unrealized gain of $4.5 billion. The company is unlikely to realize these gains, as founder and Executive Chairman Michael Saylor has been fully invested in bitcoin for several years.
MicroStrategy: A semi hedge Fund
As with previous investments, MicroStrategy took on additional debt. Proceeds from the issuance and sale of common stock have been used to finance recent purchases. In August, MicroStrategy also conducted a 10-for-1 stock split to make its stock more accessible to investors and employees.
So far, the strategy is paying off. Through its leveraged bitcoin strategy, MicroStrategy has doubled its stock price this year. Bitcoin has only risen 40% over the same period. The company's stock is even in the portfolio of the Swiss National Bank (SNB).
