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Business intelligence vendor MicroStrategy reveals it’s bought a billion bucks of bitcoin

Better capital returns than cash and all allowed under company rules

Business intelligence software vendor MicroStrategy has revealed it’s sitting on a billion bucks worth of bitcoin.

The company on Monday published a statement revealing that it recently purchased “approximately 29,646 bitcoins for approximately $650.0 million in cash in accordance with its Treasury Reserve Policy, at an average price of approximately $21,925 per bitcoin, inclusive of fees and expenses.”

That purchase brought the company’s total bitcoin holding to “approximately 70,470 bitcoins,” according to MicroStrategy CEO Michael J. Saylor.

“The acquisition of additional bitcoins announced today reaffirms our belief that bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value,” Saylor said. President and CFO Phong Le weighed in, saying “The Company continues to believe bitcoin will provide the opportunity for better returns and preserve the value of our capital over time compared to holding cash.”

A single bitcoin was valued at around $7,150 in January 2020. At the time of writing, you’d need $22,803 to buy one unit of the cryptocurrency. That kind of increase in value is hard to find at any time, never mind during a year the World Bank predicts will bring “the deepest global recession since the Second World War.”

CEO Saylor thinks buying up bitcoin is one reason his company’s share price has done well. It currently sells for $317.60 a share, compared to $144.33 on January 1st, 2020.

However, the company’s scrip took a ten percent dive in early December. And bitcoin shed 3.7 percent of its value on Monday alone.

MicroStrategy trades on the NASDAQ, but disclosure of its bitcoin holdings was made in a press release rather than a regulatory filing, as was the case when it filed [PDF] news of an earlier purchase.

It unusual for listed businesses to disclose the exact nature of the instruments they use for easily-liquidated investments, but MicroStrategy’s CEO Saylor appears to be a genuine bitcoin believer and his enthusiasm for it and use of it at a listed company could conceivably increase confidence in the cryptocurrency. Which could, in turn, send its price even higher. ®

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