Microstrategy’s Bitcoin Holdings – What You Need to Know
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Anyone who’s at least mildly interested in the cryptocurrency market must have heard of Microstrategy. At this point, the tech giant is famous for its unparalleled public support for Bitcoin, as expressed via its massive holdings of the asset. In fact, Microstrategy co-founder Michael J. Saylor may be an even better candidate for the face of crypto than Elon Musk or the Winklevoss twins, judging by his investment decisions.
You just don’t see companies worth billions of dollars pour hundreds of millions into cryptocurrency so consistently. Microstrategy has been carefully expanding its Bitcoin portfolio for the past three years. As of 2023, it’s the single biggest corporate entity that has invested in the world’s first cryptocurrency. No other company out there – and scarcely any private individual – can boast of a similar hoard of BTC in its metaphorical vault.
But things haven’t always been easy for Bitcoin. The past two years have been especially rough in the crypto market. So, how has this affected Microstrategy? Can we expect the company to call it quits with crypto and get rid of its massive investment anytime soon? Let’s take a deeper look into Microstrategy’s Bitcoin holdings and inner workings.
What Is Microstrategy?
Microstrategy is a company with over three decades of experience in the field of data analytics. It was founded by MIT graduates Michael J. Saylor and Sanju Bansal in 1989. Since then, it has worked with many successful international businesses to help them drive revenues up. Today, Microstrategy Incorporated provides various software and cloud computing services and has a steady position in its niche.
The company develops sophisticated mathematical solutions that look into businesses’ inner workings to identify areas for improvement and support each client’s revenue growth strategies. Some of its most notable clients include McDonald’s and Apple, and it has also collaborated on different projects with Facebook.
Since its IPO in 1998, Microstrategy shares have been publicly traded on NASDAQ. As of 2021, the company has a valuation of $3.5 billion.
Bitcoin in 2024: Still in Crisis?
The massive crypto crash of 2022 is likely still fresh in your mind. The sector as a whole took a massive turn for the worse amid spiking global inflation and reliability and adoption concerns over the Bitcoin blockchain. Additionally, the cost and speed of Bitcoin transactions, the crash of a well-known crypto exchange, and general economic apprehension worldwide didn’t help.
In fact, Bitcoin opened the year on a rather negative note. In January, it traded at around $17K, over six times lower than its 2021 all-time high. That certainly wasn’t a good time to be a Bitcoin investor.
Nevertheless, 2023 has told a different story. The cryptocurrency market has been slowly but steadily recovering. Though it’s still far below its maximum price from two years ago, Bitcoin has managed to climb to over $38,000 per coin.
In other words, there is a newly found optimism among investors. Or perhaps they have grown tired of the bearish trend. It may finally be time to flip sentiment up. Either way, the cryptocurrency sector is growing, and Bitcoin is already doing much better.
To be precise, the first time Bitcoin ever started trading over 30,000 USD was in 2021, which preceded its climb to the aforementioned ATH of around $68,000. If past performance is any indicator (and please note that it isn’t always), another bullish run could happen very soon.
If you happen to be curious about Bitcoin and wish to invest in it yourself, your best bet may be a cryptocurrency broker. Brokers allow you to speculate on the price of an asset without owning it, making getting rid of an unsuccessful investment easier. If you’re unsure where to begin, try using a platform such as Immediate Bitmasters to locate a suitable broker in your region.
Microstrategy’s Bitcoin Holdings
Among businesses, Microstrategy is among the most well-known names that have shown support for cryptocurrency, Bitcoin, in particular. This endorsement is mainly expressed through the company’s continued massive investments in BTC. Despite all of the plot twists and uncertainty experienced broadly in the cryptocurrency market over the past couple of years, it has not backed out.
Microstrategy was among the corporate crypto pioneers, in a sense, as it invested 250 million US dollars in Bitcoin back in 2020. It acquired a massive count of bitcoins as a means of diversifying its portfolio. In other words, the company appears to treat Bitcoin as a reliable store of value.
It did not actually stop there. Over the following months, it continued to add more BTC to its portfolio. Supposedly, Microstrategy held over 130,000 bitcoins by the end of 2022. Though it purchased them at different values, the costs even out to about 30,000 USD per bitcoin.
Keeping that in mind, Microstrategy’s CFO announced that the company may be subject to a margin call if the value of Bitcoin dropped below 21,000 USD. In such a turn of events, Microstrategy would need to sell some of its Bitcoin. It will have to offset losses and prevent further damage to its investments.
Nevertheless, this decrease came and went, and Microstrategy has not seemed particularly bothered by it. At the end of 2022, it did sell around 700 BTC, but it held onto most of its crypto coins.
In fact, the company reported that as recently as November 2023, it was still purchasing more Bitcoin. It appears to have bought a lot more than it sold last year, spending $600 million on its newest acquisition.
What Does It All Mean?
It’s usually impossible to read anyone else’s mind, let alone the minds of big-time investors. However, one thing seems clear. Microstrategy has been firmly in support of the Bitcoin network for the past three years despite everything that went on in the crypto market.
This kind of unshakeable trust may either be seen as foolish or genius. On the one hand, it seems borderline ridiculous that someone would put billions of dollars into blindly trusting that Bitcoin will withstand the test of time and prove to be a valuable investment in the future.
After all, crypto has faced all manner of criticism about its volatility, unreliability, transaction fees, and slow adoption. Even among crypto assets, BTC, in particular, does not have the best reputation. That's due to environmental concerns about Bitcoin mining and a somewhat outdated consensus mechanism compared to some of the newer coins that came after it.
At the same time, Bitcoin is still the face of cryptocurrencies. It has the highest market cap and is usually the go-to asset for crypto backers. Plus, the early backers who supported Bitcoin back in 2008 when it was practically worthless are now millionaires. So, in a way, Microstrategy could be making a similar bet – but on a larger scale.
Perhaps the company has a steady enough inflow of cash from its regular business. Then, it can withstand the crypto market’s periods of uncertainty. For a software company whose main product is intelligence, we’d bet that there may be something its leadership knows that the general public doesn’t. Otherwise, how could anyone explain why a company built to help businesses increase their own profitability would be dumping billions of dollars into a doomed asset?
Saylor, at least, continues to maintain that Bitcoin is the way to go.
Final Thoughts
So, is the Microstrategy leadership completely off the mark? Or are they secretly up to something and about to pull off the biggest financial magic trick of the decade?
Based on the recent growth seen in the cryptocurrency sector, the latter seems to be a more likely scenario. In fact, the Bitcoin price moving above 37K, well above the average purchase price of around 30K that Microstrategy has so far been paying per coin, means the company is already seeing positive financial results from its investments. It’s clearly an example of the old adage – time in the market beats timing the market.
In either case, this may be enough to get you thinking about investing in Bitcoin yourself. If it is something you’re considering, we urge you to always do proper market research and coordinate your investments with your budget. In addition, always develop an exit strategy and keep in mind that the market is volatile and unpredictable. Good luck!
Robyn Greenspan, an independent researcher and speaker, is interested in innovation, market trends and information technology. She was a participant in the AI Summit and also took part in the IEEE International Conference on Edge Computing, International SOA Symposium series and the International Cloud Symposium series. She graduated from Temple University. She was previously the communications and research manager for the AMS, an internationally recognized professional association that advances knowledge in the IT and business management areas.
