Microstrategy’s shares rose 287% as the value of its Bitcoin (BTC) holdings more than doubled in four months
Microstrategy's Bitcoin stash, which the firm bought for $1.125 billion, rose to %2.28 billion.
Mon, 04 Jan 2021, 08:36 am UTC
Microstrategy Inc. made waves in August last year when it purchased Bitcoin (BTC0 worth $250 million at that time as part of its capital allocation strategy. The Nasdaq-listed firm’s decision to invest in the crypto now proves to be a very profitable one as the value of its cryptocurrency holdings has more than doubled just after four months.
The Virginia-based business intelligence firm is one of the first institutional investors to invest in Bitcoin. In a series of multi-million dollar purchases of the cryptocurrency that started in August until December 2020, Microstrategy’s BTC holdings ballooned to 70,470 coins by the end of December, according to Bitcoin.com.
Microstrategy spent a total of $1.125 billion to acquire its massive Bitcoin stash of 70,470. But the decision to go into crypto proved to be very profitable for the firm as its value soared to $2.4 billion when BTC traded past $34,000 over the weekend.
Data from Coinmarketcap reveal that Bitcoin’s price slid back down and is trading at around $32,300 at the time of writing, which means that the value of MicroStrategy’s BTC stash was slightly reduced to around $2.28 billion. However, the figure represents a massive gain for the firm as it means that its digital assets holdings have more than doubled in value in just four months.
With the BTC rally, Microstrategy’s stock rose by 287 percent during the period. The Nasdaq-listed traded firm’s stock, which traded at $135 per share on August 11 when it made its first Bitcoin purchase, rose to $388.55 on December 31, 2020. Similarly, its market cap rose from $1.3 billion to $3.6 billion.
On August 11, Microstrategy bought 21,454 BTC for $250 million followed by another purchase of 16,796 BTC on September 14. The firm bought 29,646 BTC in December from the proceeds of its $650 million debt issuance, according to Coindesk.
Microstrategy CEO Michael Saylor explained that the company’s investment in Bitcoin is for the long haul. “This is not a speculation, nor a hedge,” Saylor explained back in August. “It is a deliberate corporate strategy to adopt the Bitcoin Standard.”
The CEO explained that BTC is better than gold or cash because there is no fear of dilution for the cryptocurrency. “Bitcoin, if it’s not a hundred times better than gold, it is a million times better than gold, and there is nothing close to it,” Saylor said.
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