Why Microstrategy keeps buying Bitcoin and What is their End Game?

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As an analyst, I’d rephrase that statement as follows: I work with a publicly-traded company that boasts the title of the world’s largest Bitcoin holder. We have chosen to park our main treasury reserves in Bitcoin.

MicroStrategy is widely recognized in the cryptocurrency sphere not just due to its business intelligence services, but primarily for its substantial investment in Bitcoin. This company has garnered attention with multiple news headlines about Bitcoin acquisition, making it one of the top Bitcoin holders. Additionally, MicroStrategy is regarded as a pioneer in both the digital asset industry and enterprise analytics.

Michael Saylor, the executive chairman and co-founder of MicroStrategy, sees his company as a prominent Bitcoin bank dedicated to developing financial services tied to Bitcoin. As the world’s most significant corporate owner of Bitcoin (with over 2% of all existing Bitcoin), its stake currently values approximately $42 Billion.

In this piece, let’s delve deeper into the factors that classify MicroStrategy (MSTR) as a significant Bitcoin player, explore their reasons for investing in cryptocurrency, discuss their acquisition tactics, analyze their effects and potential risks, and examine Saylor’s forecast for Bitcoin’s price.

MicroStrategy

In 1989, MicroStrategy was established by Michael Saylor and Sanju Bansal. This company stands out significantly in the field of business intelligence, offering tools to help businesses make informed decisions based on data, thereby enhancing their standing in various industries.

Indeed, MicroStrategy’s decision to invest heavily in Bitcoin back in 2020 drastically altered the way people perceive the company. Instead of being known primarily as a software firm, it has since emerged as a significant player in the world of Bitcoin. The strategic shift towards cryptocurrency, making it their main asset, places MicroStrategy at the forefront of corporate Bitcoin adoption.

MicroStrategy’s Bitcoin Accumulation

MicroStrategy embarked on its Bitcoin venture in August 2020, marking the start of a robust buying spree. Here’s a breakdown of MicroStrategy’s significant Bitcoin acquisitions over time:

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MicroStrategy kicked off its Bitcoin adventure in August 2020, signaling the commencement of a vigorous purchasing phase. Below is a chronology of MicroStrategy’s major Bitcoin investments:

2020 Buy

In 2020, MicroStrategy made its initial foray into the Bitcoin market by buying 21,454 Bitcoins at a cost of $250 million, using it as a safeguard against inflation. By December, they further increased their holdings with another purchase of 48,016 Bitcoins for $875 million, resulting in a total of 70,470 Bitcoins by the year’s end.

2021 Buy

2021 saw MicroStrategy significantly increase its ownership of Bitcoin. Notable acquisitions took place in February (19,452 BTC at a cost of $1.026 billion) and June (13,005 BTC for $489 million). By the end of December, these additions amounted to 42,848 BTC, raising its overall holdings to a substantial 124,391 BTC. This move strengthened MicroStrategy’s presence in the digital currency market.

2022 Buy

In the face of market fluctuations throughout 2022, MicroStrategy invested approximately $262.65 Million to acquire 7,853 Bitcoins. Later in December, as part of a strategic move, the company offloaded 704 BTC for about $11.8 Million. This action was primarily taken for tax reasons. Subsequently, MicroStrategy reaffirmed its commitment to Bitcoin by purchasing an additional 810 coins, underscoring their long-term Bitcoin investment plan.

2023 Buy

In the year 2023, MicroStrategy made one of its largest purchases by acquiring 25,900 Bitcoins at approximately $693 million. This deal was broken down into two significant portions: 12,333 Bitcoins were bought between April and June for a total of $347 million, and an additional 6,455 Bitcoins were purchased in March for $150 million. These transactions underscore MicroStrategy’s steadfast dedication to expanding its Bitcoin holdings.

2024 Buy

In 2021, MicroStrategy made history with a massive Bitcoin purchase worth approximately $6 billion, acquiring a total of 90,079 Bitcoins. Notably, this included purchasing 27,200 BTC for $2 billion in November and another 18,300 BTC for $1.11 billion in September. By December, MicroStrategy had solidified its position as a leading player in Bitcoin amassment.

How Many Bitcoin Microstrategy Holds?

Based on BitBo’s Bitcoin Treasuries statistics, MicroStrategy owns approximately 446,400 Bitcoins as of December 31, 2024. These were acquired for a total of $27.9 billion, with an average price of around $62,428 per Bitcoin.

As a crypto investor, I’m thrilled to share that Bitcoin has soared past the $100,000 mark, and with our company’s holdings now valued at approximately $42 Billion, it represents more than 2% of the total Bitcoin supply in circulation. This significant investment underscores MicroStrategy’s substantial impact on the crypto market, demonstrating our influence in this dynamic digital realm.

Why is MicroStrategy Buying Bitcoin?

According to Michael Saylor, Bitcoin serves as the primary means for preserving the company’s wealth. Here are the key factors driving a consistent emphasis on buying Bitcoin.

Hedge Against Inflation

In simpler terms, conventional forms of money could potentially lose value due to inflation since central banks keep printing more money. Saylor argues that the company’s possession of 21 million Bitcoins positions it as an excellent investment for long-term wealth accumulation, much like digital gold.

Long-Term Asset Appreciation

In simpler terms, the increase in value for Bitcoin over time has been greater than what’s typically seen in assets like stocks and property. MicroStrategy intends to benefit from Bitcoin’s future growth potential.

Financial Resilience

By transforming cash holdings into Bitcoins, MicroStrategy expands the variety of its investments, maintaining a fluid financial state while also safeguarding against potential devaluation of traditional currencies.

Corporate Leadership

By integrating Bitcoin into its operations, MicroStrategy has positioned itself as a forward-thinking pioneer, capturing the attention and curiosity of investors and businesses alike, inspiring them to consider adopting similar strategies.

How MicroStrategy Buys Bitcoin?

MicroStrategy’s financing approach for purchasing Bitcoins matches the audacity of its acquisition strategy. Here’s how they continued expanding their Bitcoin reserves:

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MicroStrategy’s method of funding Bitcoin purchases is as daring as its buying tactics. This is how they kept increasing their BTC holdings:

Equity Offerings

The business exclusively used the proceeds from selling shares to acquire Bitcoins. By late 2024, MicroStrategy had amassed a $10.2 billion Bitcoin portfolio through raising $42 billion via share and bond sales.

Convertible Debt

MicroStrategy secured financing via convertible bonds in 2024, marking their fifth such issue. Remarkably, they managed to amass an impressive $3 Billion without any interest charges attached. This kind of lending allows MicroStrategy to gather resources while postponing repayment obligations.

Direct Purchases

Regularly, MicroStrategy publicly discloses direct purchases of Bitcoin. In November 2024, it made news by buying 55,500 Bitcoins for $5.4 billion, making this the largest single acquisition. With these investment strategies, MicroStrategy has solidified its status as one of the major holders of Bitcoin.

Bitcoin Price Prediction by Michael Saylor

As a crypto investor, I’m excited about Michael Saylor’s prediction that one Bitcoin could potentially hit $13 million by the year 2045. That’s an impressive estimated annual return of 29%. This optimism stems from the growing institutional acceptance of Bitcoin, with more and more businesses and investors viewing it as a valuable reserve asset.

Additionally, he noted a rise in regulatory transparency as governments endorse pro-cryptocurrency initiatives, enhancing credibility for digital currencies, particularly Bitcoin. Furthermore, advancements in Bitcoin’s technological aspects, including enhanced scalability and security, are expected to foster global acceptance.

MicroStrategy’s Bitcoin Strategy: Impact and Risk

MicroStrategy’s Bitcoin acquisitions have a substantial impact on the market. Their purchases tend to elevate Bitcoin’s price and bolster investor confidence, as demonstrated in February 2021 when a 20% increase was observed after their $1 Billion investment. This trend has also sparked other corporations to delve into the realm of cryptocurrencies.

On the other hand, MicroStrategy’s approach to Bitcoin involves potential hazards such as Bitcoin’s price instability and the company’s significant use of debt, which might cause financial difficulties should Bitcoin’s value decrease or interest rates increase.

Conclusion

MicroStrategy’s Bitcoin venture underscores the company’s influence on Bitcoin acceptance and reshaping institutional tactics. This strategy combines conventional banking with the decentralized network, fostering a worldwide surge in cryptocurrency adoption.

From my perspective as an analyst, while the long-term viability of MicroStrategy’s stake in Bitcoin remains questionable, it’s undeniable that their strategic moves have significantly influenced the Bitcoin market. Indeed, their actions have played a notable role in shaping the evolution of Bitcoin.

On January 3rd, MicroStrategy owned approximately 446,400 Bitcoins, which were worth around $43.7 billion. The firm intends to gather up to $2 billion by offering perpetual preferred stocks, with the funds earmarked for buying more Bitcoin as part of its ’21/21′ strategy. This new capital raise demonstrates MicroStrategy’s optimism in their long-term Bitcoin investment approach.

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2025-01-07 12:39