Bitcoin’s Biggest Believer: MicroStrategy’s Journey to Owning 1% of Global Supply

MicroStrategy, the business intelligence firm led by Bitcoin bull Michael Saylor, has once again doubled down on its commitment to the world’s largest cryptocurrency.

In a recent SEC filing, the company revealed that it had acquired an additional 9,245 BTC for $623 million, bringing its total holdings to an astounding 214,246 BTC, worth approximately $13.39 billion at current market prices.

TLDR

MicroStrategy has acquired an additional 9,245 BTC for $623 million, bringing its total holdings to 214,246 BTC, worth approximately $13.39 billion.
The company now owns over 1% of all bitcoin that has been mined to date, with an average purchase price of $35,160 per BTC.
MicroStrategy’s latest purchase was funded by $592.3 million in proceeds from a convertible note offering and $30.7 million of excess cash.
The company’s stock (MSTR) has declined by more than 16% during the past day, prompting concerns about overvaluation due to its dependence on Bitcoin.
MicroStrategy CEO Michael Saylor remains bullish on Bitcoin, stating that it will surpass gold as the world’s most valuable commodity.

This latest acquisition means that MicroStrategy now owns over 1% of all bitcoin that has been mined to date, solidifying its position as one of the largest institutional holders of the digital asset.

The company’s average purchase price stands at $35,160 per BTC, indicating a significant profit on its investment, given the current market price of around $63,000.

MicroStrategy has acquired an additional 9,245 BTC for ~$623.0M using proceeds from convertible notes & excess cash for ~$67,382 per #bitcoin. As of 3/18/24, $MSTR hodls 214,246 $BTC acquired for ~$7.53B at average price of $35,160 per bitcoin. https://t.co/oeYJGgiuy0

— Michael Saylor (@saylor) March 19, 2024

MicroStrategy’s aggressive Bitcoin accumulation strategy began in August 2020, when the company made its first purchase of 21,454 BTC for $250 million.

Since then, the firm has consistently increased its holdings, with almost a quarter of its purchases made in 2024 alone.

The latest acquisition was funded by $592.3 million in proceeds from a convertible note offering and $30.7 million of excess cash, highlighting the company’s willingness to leverage debt to invest in Bitcoin.

Despite the bullish sentiment surrounding MicroStrategy’s Bitcoin holdings, the company’s stock (MSTR) has not been immune to market volatility.

Following the announcement of the latest purchase, MSTR shares declined by more than 16%, prompting concerns among analysts about the stock’s overvaluation due to its heavy dependence on Bitcoin’s performance.

Alpha Spread analysts estimate that MSTR is currently overvalued by a staggering 94%, assigning an intrinsic value of just $84.97 to the stock. The analysts point to the company’s pivot towards a Bitcoin-centric approach, which has overshadowed its core business operations.

However, Michael Saylor remains undeterred by the short-term fluctuations in both Bitcoin and MSTR stock prices. The MicroStrategy CEO has been a vocal advocate for the digital asset, recently stating that Bitcoin will “eat gold” and become the world’s most valuable commodity. Saylor believes that Bitcoin possesses all of the desirable attributes of gold without any of its drawbacks, making it a superior store of value and hedge against inflation.

As MicroStrategy continues to accumulate Bitcoin, some analysts have raised concerns about the potential risks associated with the company’s strategy.

JPMorgan analysts recently cautioned that MicroStrategy’s reliance on debt to purchase Bitcoin could exacerbate a market downturn, as the company’s financial health becomes increasingly tied to the performance of the volatile cryptocurrency.

The recent flash crash on the Bitmex exchange, which saw Bitcoin’s price briefly plummet to below $9,000, serves as a stark reminder of the inherent risks associated with investing in cryptocurrencies.

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