MicroStrategy Inc. Chair Michael Saylor Makes $593 Million Bitcoin Bet
MicroStrategy Inc, a Tysons Corner, Virginia-based enterprise-software maker, recently announced its purchase of $593.3 million worth of Bitcoin in November, raising its total holdings to approximately $6.5 billion. This significant investment, made by the company’s chairman and co-founder Michael Saylor, is one of their largest Bitcoin bets to date.
Background of the company’s Bitcoin investment
Michael Saylor started buying Bitcoin in 2020, and this year the enterprise-software maker turned Bitcoin investment-fund proxy has been ramping up its purchases. This surge comes as the cryptocurrency recovered from a year of losses caused by rising rates and some high-profile crypto implosions and bankruptcies. Saylor stepped down from the chief executive role a year ago, intending to focus on the Bitcoin aspect of the company’s now dual strategy.
MicroStrategy’s stock performance
MicroStrategy’s shares have surged 250% this year, outperforming Bitcoin’s rally of more than 125%. This outperformance is attributed to optimism about the possible approval of a US-based exchange-traded fund (ETF) that invests directly in the cryptocurrency. Additionally, there has been reassurance that an ETF will not diminish demand for the company’s stock. “If/when we get a Bitcoin ETF, it will raise the interest in the asset class,” said Matthew J. Maley, chief market strategist at Miller Tabak + Co. “There shouldn’t be a lot of cannibalization.”
MicroStrategy’s financial moves
In addition to the significant Bitcoin purchase, MicroStrategy also entered into an agreement with Cowen and Company, Canaccord Genuity, and BTIG to offer up to $750 million of common stock. The company had initially announced plans to raise the amount through share sales in August. This move was aimed at using the proceeds for purposes such as Bitcoin purchases, working capital, and the repurchase of debt.
The firm’s shares are expected to benefit from the rising interest in Bitcoin as an asset class, despite concerns about cannibalization. The Tysons Corner, Virginia-based firm has been taking aggressive financial steps in the cryptocurrency space, underlining its bullishness on Bitcoin’s long-term potential.
–With assistance from Tom Contiliano.
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