Bitcoin’s Biggest Corporate Backer Invests Another $500 Million As Crypto Prices Crash

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Jonathan Ponciano   Forbes U.S. Staff

Bitcoin’s Biggest Corporate Backer Invests Another $500 Million As Crypto Prices Crash

MicroStrategy CEO Michael Saylor. Photo: Michael Saylor Twitter 

Two weeks after announcing a debt offering to fund the investment, business analytics firm MicroStrategy, which owns more bitcoin than any other corporation in the world, has spent nearly $500 million to acquire more of the world’s largest cryptocurrency—taking advantage of crashing prices Monday morning despite warning of a significant loss to come as a result of bitcoin’s tanking value. 

KEY FACTS

- Virginia-based MicroStrategy announced Monday morning that it used approximately $489 million in cash raised last week to buy about 13,005 bitcoins at an average price of roughly $37,617.

- With the new investment, MicroStrategy owns about 105,085 bitcoins, worth approximately $3.4 billion as prices tumble nearly 10% from a Sunday afternoon high.

- Helmed by billionaire bitcoin bull Michael Saylor, the firm has so far spent more than $2.7 billion buying bitcoin at an average price of $26,080—about 15% below current prices of $32,000.

MicroStrategy shares plunged 7% in premarket trading and are now down more than 49% from a mid-February high. 

KEY BACKGROUND

MicroStrategy’s bitcoin commitment has helped the company’s stock reverse a decades-long lull that started when the dot-com bubble crashed in March 2000. Despite at one point crashing more than 99% from its tech-bubble high in 2000, the stock has skyrocketed more than 300% since Saylor announced the company’s first bitcoin purchase in August. However, shares tend to ride bitcoin’s incredibly volatile price wave. In a filing last Monday, MicroStrategy said it expects to incur an impairment loss of at least $284.5 million in the second quarter “based on the fluctuations in the market price of bitcoin.” Now down nearly 80% from their dot-com era peak, shares have plunged more than 50% since February, when bitcoin sank after Tesla CEO Elon Musk said prices seemed “a little high.” The cryptocurrency is down about 40% over the same period, but like MicroStrategy, its prices are up more than 300% over the past year.

SURPRISING FACT 

In a sign of massive interest from institutional investors, MicroStrategy reportedly received more than $1.5 billion in orders for the offering, which was announced two weeks ago while bitcoin prices were at a one-month low of about $33,400.

TANGET 

MicroStrategy owns more bitcoin than any publicly traded company, but less than investment manager Grayscale, which owns 654,885 tokens in its namesake bitcoin fund—worth more than $24 billion.

 

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Jonathan Ponciano   Forbes U.S. Staff

I'm a reporter at Forbes focusing on wealth and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC's Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire.