MicroStrategy, the tech giant notorious for its bullish stance on Bitcoin, has once again made headlines with its latest acquisition spree, adding a staggering 850 coins to its already hefty portfolio in January alone. This move, as announced by the company’s ever-vocal founder Michael Saylor via a social media post on X, came with a hefty price tag of $37.5 million. It’s a bold step, further cementing MicroStrategy’s position as a behemoth in the cryptocurrency investment space.
A Deep Dive into MicroStrategy’s Accumulation Strategy
The company’s aggressive accumulation strategy doesn’t stop at the recent purchase. Since the close of the third quarter, MicroStrategy has secured an additional 31,755 Bitcoin, shelling out nearly $1.3 billion in the process. This marks the 13th consecutive quarter that the company has expanded its Bitcoin holdings, showcasing an unwavering commitment to the cryptocurrency through various market conditions. The acquisition spree has brought the company’s total holdings to a monumental 190,000 Bitcoin, acquired at an average cost of $31,224 per coin, totaling nearly $6 billion invested.
Phong Lee, the CEO of MicroStrategy, shared insights into the company’s strategy, emphasizing the year 2023 as a period of strategic capital raising to bolster its Bitcoin reserves. Lee pointed out the launch of MicroStrategy AI, a first-to-market AI-based BI tool, as part of the company’s innovation and growth strategy. The company’s focus on blending its operational structure with its Bitcoin strategy and technological innovation aims to unlock unparalleled value for its shareholders.
Andrew Kang, the Chief Financial Officer, highlighted the benefits reaped from the surge in Bitcoin prices in the fourth quarter. He reaffirmed the company’s intent to continue expanding its Bitcoin portfolio, signaling a long-term bullish outlook on the cryptocurrency.
The Financials Behind the Bitcoin Bet
MicroStrategy’s latest earnings release shed light on the financial intricacies of its Bitcoin investment. Despite facing cumulative impairment losses of $2.269 billion since the inception of its Bitcoin journey, the company reported a carrying value of $3.6 billion for its Bitcoin stash. This reflects an average carrying amount per Bitcoin of approximately $19,172, against a backdrop of a cost basis of $5.8 billion and a market value soaring to $8 billion.
The narrative took a positive turn as MicroStrategy posted its first profit in nine quarters, buoyed by a substantial tax benefit linked to its Bitcoin holdings. This profit, amounting to $461 million, or $31.79 per share for the first quarter, contrasts sharply with the loss recorded in the same period a year earlier. The profit was primarily driven by a 72% rise in Bitcoin prices, allowing the company to leverage a one-time tax benefit of $453.2 million.
Not just content with financial engineering, MicroStrategy has also seen a modest uptick in its core business, with software revenue climbing to $121 million, surpassing Bloomberg analysts’ expectations. This financial rejuvenation comes in the wake of Michael Saylor’s strategic pivot in 2020 to invest heavily in Bitcoin, aiming to hedge against inflation while diversifying the company’s cash reserves.
Saylor’s strategy appears to have paid dividends, with MicroStrategy’s stock price doubling this year, echoing Bitcoin’s own robust performance. The company’s unwavering commitment to Bitcoin, underscored by Saylor’s readiness to offload personal shares for further Bitcoin investments, highlights a deep-seated belief in the cryptocurrency’s value proposition.
