Bitcoin’s Biggest Corporate Backer Invests Another $500 Million As Crypto Prices Crash

Topline

Two weeks after announcing a debt offering to fund the investment, business analytics firm MicroStrategy, which owns more bitcoin than any other corporation in the world, has spent nearly $500 million to acquire more of the world’s largest cryptocurrency—taking advantage of crashing prices Monday morning despite warning of a significant loss to come as a result of bitcoin’s tanking value. 

MicroStrategy CEO Michael Saylor speaks at the Bitcoin 2021 Convention in Miami.

Getty Images Key Facts

Virginia-based MicroStrategy announced Monday morning that it used approximately $489 million in cash raised last week to buy about 13,005 bitcoins at an average price of roughly $37,617.

With the new investment, MicroStrategy owns about 105,085 bitcoins, worth approximately $3.4 billion as prices tumble nearly 10% from a Sunday afternoon high.

Helmed by billionaire bitcoin bull Michael Saylor, the firm has so far spent more than $2.7 billion buying bitcoin at an average price of $26,080—about 15% below current prices of $32,000.

MicroStrategy shares plunged 7% in pre-market trading and are now down more than 49% from a mid-February high. 

Key Background

MicroStrategy’s bitcoin commitment has helped the company’s stock reverse a decades-long lull that started when the dot-com bubble crashed in March 2000. Despite at one point crashing more than 99% from its tech-bubble high in 2000, the stock has skyrocketed more than 300% since Saylor announced the company’s first bitcoin purchase in August. However, shares tend to ride bitcoin’s incredibly volatile price wave. In a filing last Monday, MicroStrategy said it expects to incur an impairment loss of at least $284.5 million in the second quarter “based on the fluctuations in the market price of bitcoin.” Now down nearly 80% from their dot-com era peak, shares have plunged more than 50% since February, when bitcoin sank after Tesla CEO Elon Musk said prices seemed “a little high.” The cryptocurrency is down about 40% over the same period, but like MicroStrategy, its prices are up more than 300% over the past year.

Surprising Fact

In a sign of massive interest from institutional investors, MicroStrategy reportedly received more than $1.5 billion in orders for the offering, which was announced two weeks ago while bitcoin prices were at a one-month low of about $33,400.

TANGENT

MicroStrategy owns more bitcoin than any publicly traded company, but less than investment manager Grayscale, which owns 654,885 tokens in its namesake bitcoin fund—worth more than $24 billion.

FURTHER READING

Major Cryptocurrencies—Including Bitcoin, Ethereum, Dogecoin—Plummet As China Widens Crackdown (Forbes)

Bitcoin’s Biggest Corporate Investor Raises $500 Million To Buy More—Topping Expectations As Crypto Surges (Forbes)

Bitcoin’s Biggest Corporate Backer Expects $285 Million Loss After Crypto Crash—But Wants To Raise $400 Million In Debt To Buy More (Forbes)