Microstrategy’s Bitcoin Investment Strategy Pays Off During Covid-19 Crisis
In a strategic move during the Covid-19 crisis, MicroStrategy’s CEO, Michael Saylor, redirected the company’s cash into Bitcoin, a decision that has now reaped benefits and profits for the company. This has led to the company purchasing 190,000 bitcoins for $5.93 billion, or $31,224 per coin, by the end of January and seeing its holdings surpass $10 billion, generating a profit of more than $4 billion as the price of bitcoin (BTC) has surged to $53,000.
Microstrategy’s Meteoric Rise in Bitcoin Holdings
MicroStrategy shifted its investment strategy in between the covid-19 pandemic, moving away from conventional assets to invest in Bitcoin. The company’s co-founder, Michael Saylor, considered traditional investments as a “melting ice cube” and foresaw the potential of Bitcoin amidst changing economic dynamics. The company’s Bitcoin holdings initiated in 2020, have witnessed unprecedented growth, reaching a total of 190,000 Bitcoins valued at $10 billion as of the firm’s Q4 2023 report. The company’s cost basis of $5.93 billion for these Bitcoins reflects a remarkable 70% unrealized profit.
MicroStrategy’s Stock Performance Appreciating on Bitcoin
MicroStrategy’s stock (MSTR) has become a closely watched proxy for Bitcoin prices, experiencing a surge of more than 500% since the company decided to hold Bitcoin. The stock has outperformed the S&P 500, rising to around $770. During a CNBC interview, Michael Saylor emphasized Bitcoin’s ETF-driven demand spike, highlighting the novelty, digital nature, and worldwide appeal. Saylor also stated that MicroStrategy will rebrand as a bitcoin development business due to the success of its crypto focus.
MicroStrategy’s bold Bitcoin bet has made it a standout case among US public companies, with only Tesla and a few crypto-related firms following a similar path. The company may potentially see additional profits, with a change in accounting by 2025 that values Bitcoin at market prices, presenting a substantial possibility of over $6 billion in profits.
All in all…
MicroStrategy’s Michael Saylor’s unconventional bet into Bitcoin has proven to be a masterstroke, yielding profits exceeding $4 billion and pushing the company’s Bitcoin holdings above the $10 billion mark. As Bitcoin’s value is believed to rise over the long run, the firm’s strategic move is sought to gain potential rewards and risks associated with the ups and down of digital assets.
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