Microstrategy has purchased Bitcoin worth 400 million dollars, and it’s all borrowed money!
Apparently, the company has upped its bond sale to 500 million USD.
Important Updates
- Microstrategy is one of the top institutional investors of Bitcoin.
- The company just recorded the first-ever junk bond sales for a volatile asset.
- Micheal Saylor is moving 400 million dollars from investors to buy more Bitcoin. The total bond sale has now come to 500 million dollars.
Bitcoin is worth more than gold
It’s easy to see that Micheal Saylor has lots of confidence in Bitcoin. During an interview in 2020, Micheal Saylor clarified why gold or silver is not as valuable as Bitcoin. As explained by Microstrategy’s boss: “You can always find more gold and silver.”
Another reason Bitcoin is better than priced metals is that people can easily produce gold and silver, ultimately leading to price inflation. On the other hand, there are only 21 million Bitcoins. Though 6-7 million are already lost, Bitcoins have higher potential than gold.
Saylor also mentioned the possibility of buying all 21 million Bitcoins, hence the need to invest right now.
2020’s boom!
When it comes to the price of Microstrategy, it hasn’t moved that much over the past five years until the end of 2020. This period marked a significant moment in Bitcoin’s history. Bitcoin price exploded, and since Microstrategy was holding Bitcoin, their stock price also skyrocketed.
Based on the income statement from 2017, Microstrategy’s revenue remained flat throughout. Also, the cash flow from major operations didn’t grow that much. But getting to 2020, there was a 1.1 billion purchase of net intangibles, aka, Bitcoin.
Microstrategy and its Bitcoin holdings
Microstrategy is supposedly a data analytics company but what’s unsurprising is that Microstrategy added a Bitcoin button feature to their website, connecting to another site called Hope.com.
In mid-May 2021, the company revealed that its Bitcoin assets amount to about 92,079 BTC, with an average price of 24,450 USD for each token. If that is true, then Microstrategy has Bitcoins valued at 2.25 billion USD. It can be deduced that Microstrategy is no longer a data analytics company but has matured into a leveraged fund for Bitcoin.
Investing in Microstrategy vs. Bitcoin: what are the odds?
Microstrategy has a market cap of about 4.57 billion USD. If the Bitcoin value of mid-May, which is 92,079, is multiplied against its current price, the total value will be approximately 3.3 billion USD.
Microstrategy’s Q1 balance sheet shows its Bitcoin holding was valued at 1.9 billion USD. The difference between the two values may suggest investors could be paying a massive premium to Microstrategy. Also, it seems there’s a disconnect between the value of Bitcoin on their balance sheet versus the actual price of stocks.
Conclusion
As far as Bitcoin is concerned, Microstrategy has grown in leaps and bounds. Essentially, the company fills in as a Bitcoin ETF. However, there are still obvious gaps in their operations as a leveraged fund.
So what do you think? Between Fidelity and Microstrategy’s ETF, which seems more promising, and which one would buy?
Tell us in the comments.
