In a recent tweet, Saylor said his company had just bought about 17k BTC. Including the previous purchase of 21k tokens, the company now owns approximately 38k BTC in total.
“On September 14, 2020, MicroStrategy completed the acquisition of 16,796 additional bitcoins for a total purchase price of $ 175 million. To date, we have purchased a total of 38,250 bitcoins at a total purchase price of $ 425 million, including fees and expenses.“
As a business intelligence software company, MicroStrategy is not normally associated with cryptocurrency. But last month, the company unveiled its revised treasury strategy to weather the uncertain economic conditions.
In a press statement, the company spoke of the downfall of cash holdings in these times. On which they believe holding BTC over cash is a better bet for the company as a going concern.
“This investment reflects our belief that Bitcoin, as the world’s most widely used cryptocurrency, is a reliable store of value and an attractive investment object with greater potential for long-term depreciation than holding cash … MicroStrategy has recognized Bitcoin as a legitimate investment vehicle that can be superior to cash and has therefore made Bitcoin the primary stake in its treasury reserve strategy. “
The news boosted cryptocurrency advocates, who have long been accused of Bitcoin being a Ponzi scheme.
As a NASDAQ publicly traded company, MicroStrategy’s foray adds a touch of legitimacy to Bitcoin. However, some observers have criticized the move, especially given that Bitcoin has failed to close above the critical $ 12k level.
Bitcoin daily chart with volume. (Source: tradingview.com)
Bitcoin as a hedge? Not every shareholder is convinced
While this is a boost for Bitcoin in terms of legitimacy, some have suggested that MicroStrategy’s approach to getting BTC heavy is the wrong thing to do.
A Twitter user pointed out that the company is severely short of cash as a result. In addition, with current expenses, which must be paid in dollars, it was a step that made little sense.
So that ~ $ 420 million you reported in cash balance is now in Bitcoins.
How are you going to pay $ 80M- $ 100M (USD) in operating costs per quarter (leases, wages for your 2,528 employees)! ??!
You’re going to convert Bitcoin to USD every time, aren’t you ?! pic.twitter.com/X498dATTEf
– Uncle Jack (@ UncleJack123) September 15, 2020
Additionally, based on Saylor’s numbers, the average net cost of his BTC purchases is $ 11,111. And while Bitcoin’s price remains below that level, Saylor’s strategy will continue to pull defenses.
Nonetheless, overt institutional interest in Bitcoin still offers welcome relief in a space grappling with scam allegations.
So much so, Barry Silbert, the CEO of Digital Currency Group, which owns Grayscale, joked that this is the beginning of a “buying race” between the two companies.
Apparently, there is some sort of bitcoin buying race between MicroStrategy and @Greyshades
– Barry Silbert (@barrysilbert) September 15, 2020
Grayscale recently made headlines behind reports that the company was buying up more Bitcoin than the mining output rate.
Analysis of the situation showed that their BTC purchases were significant. But the reported “inflows” were from “old bitcoin” sent by hedge funds.