Updated 17 May, 2021

MicroStrategy Buys More Bitcoin Despite Musk’s Criticism

MicroStrategy

 

 

 

Key Takeaways:

  • Michael Saylor adds 271 bitcoins for $15 million to MicroStrategy’s BTC holdings
  • The move comes the same day Tesla announces it suspends Bitcoin payments for its cars

271 Additional Bitcoins Bought By MicroStrategy

For over a year, MicroStrategy has been actively purchasing Bitcoin on a regular basis. The newest addition of Bitcoin was made last week. MicroStrategy’s CEO Michael Saylor posted on Twitter the business intelligence company has acquired 271 bitcoins.

“MicroStrategy has purchased an additional 271 bitcoins for $15.0 million in cash at an average price of ~$55,387 per bitcoin,” the Twitter post said. The company now owns approximately 91,850 bitcoins. The newest bitcoin addition to MicroStrategy’s treasury arrived the same day. This was when Tesla CEO Elon Musk announced the car company will no longer be accepting bitcoin as payment for its electric vehicles.

Moments after the head of Tesla posted the news, the price of bitcoin slipped to levels below $50,000. This was lower than the purchase price of MicroStrategy’s investment. The cloud computing firm continues to grow its bitcoin stack relative to cash on its balance sheet.

Currently, MicroStrategy’s Bitcoin reserves represent 88% of the market capitalization of the NASDAQ-listed Virginia company. It is valued at around $5bn. In other words, MicroStrategy’s Bitcoin share is worth roughly $4.5bn, leaving about $500mn in cash.

What Led To This Purchase

MicroStrategy’s latest purchase brought total Bitcoin holdings to 0.437% of Bitcoin’s entire supply. In comparison, Tesla’s disclosed Bitcoin holdings stand at less than half, 43,200 Bitcoins, or 0.206%.

The day Mr. Saylor announced the acquisition on Twitter, the share price of MicroStrategy fell from $495 to levels around $480. Later, however, the stock recovered and even pushed higher. It ended the week at $521, which was still below the weekly opening price, $615 a share.

MicroStrategy’s total Bitcoin holdings have doubled in value based on the present market price of Bitcoin, which gravitates around $45,000. The company’s Bitcoin’s stake of over 90,000 Bitcoins has an average purchase price of $24,403 per coin.

In contrast, Tesla’s Bitcoin bombshell to stop dealing with Bitcoin was seen as a largely unexpected move by the EV maker given that Elon Musk was actively promoting Bitcoin’s properties and growth potential. For its decision to suspend Bitcoin payments for the electric cars, Tesla and Elon Musk cited environmental concerns due to the Bitcoin’s energy-intensive mining mechanism.

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