MicroStrategy Buys $489M More of Bitcoin; Price Drop May Mean Writedown Ahead

The business-intelligence software company said that as of June 21 it holds more than 105,000 bitcoins.

Jun 21, 2021 at 12:45 p.m. UTC
Updated Sep 14, 2021 at 1:14 p.m. UTC

MicroStrategy said Monday it bought about 13,005 bitcoins for $489 million in cash at an average price of roughly $37,617 inclusive of fees and expenses. 

  • The business-intelligence software company now holds some 105,085 bitcoins, which were acquired for a total of $2.74 billion. That’s an average purchase price of $26,080 per bitcoin, inclusive of fees and expenses.
  • Given MicroStrategy paid a per-coin price of $37,617, the company's purchase is already underwater with the leading cryptocurrency currently trading at about $32,000.
  • Should the price of bitcoin not fully recover to the purchase price by the end of June 30, MicroStrategy will have to write the value of the newly purchased bitcoin down to the price at quarter end. Were the quarter to end right now, with bitcoin at $32,000, the value of that $489 million in bitcoin would have to be reduced about $73 million to $416 million.
  • A call to MicroStrategy wasn't immediately returned.
  • CEO Michael Saylor has made bitcoin acquisition a second mandate for his 32-year-old company. Its other business is developing software.
  • The purchase follows MicroStrategy's raising of $500 million from the sale of debt to fund more bitcoin buying. As the company subsequently filed to sell $1 billion in shares to help buy even more of the leading cryptocurrency, we likely will see another purchase soon.
  • Shares of Nasdaq-listed MicroStrategy are getting pounded today, down about 10%, as their fate are now largely tied to the price of bitcoin, which has fallen by a similar amount after China's central bank continued the nation's crackdown on crypto. The People's Bank of China said financial institutions must not provide trading, clearing and settlement for crypto transactions.
  • As mentioned earlier, the price of bitcoin was trading at about $32,000, less than half its all-time high set in April.

UPDATE (June 6, 13:47 UTC): Adds stock and debt offerings, share reaction, price of bitcoin.
UPDATE (June 6, 23:23 UTC): Adds possible writedown.

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