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Wednesday, March 22, 2023

MicroStrategy Now Down $1B on Its Bitcoin Bet

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Michael Saylor’s MicroStrategy (MSTR) is sitting on an unrealized loss of more than $1 billion on its bitcoin (BTC) holdings as the price of the largest crypto by market value touches $22,900 in Monday trading.

With bitcoin evangelist Saylor at the helm, MicroStrategy has amassed around 129,200 BTC bought at an average price of $30,700, or about $3.96 billion in total. It is the largest holding of bitcoin by any publicly traded company.

But the value of the stash dropped to $2.97 billion after the price of BTC tumbled more than 17% in a day to $23,000 on Monday.

That’s a loss of just under $1 billion for the Nasdaq-listed company, which provides business intelligence, mobile software, and cloud-based services.

MicroStrategy is now at risk of liquidation should the BTC price fall below $21,000, according to analysts. The company borrowed billions of dollars to buy bitcoin. In March, it used its BTC holdings as collateral to take out a $205 million loan with Silvergate Bank in order to buy even more bitcoin.

Much of the funding of MSTR’s buys came via junk bond and convertible note sales. Last month, Saylor dismissed talks of a margin call, stating that a problem would occur only if bitcoin reached $3,562.
MicroStrategy shares are down 24.32% on Monday as it leads the sell-off in crypto-related stocks. The stock has tanked more than 70% on a year-to-date basis.
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