Michael Saylor: MicroStrategy Exploring Options to Use Its Bitcoin

MicroStrategy is looking to continue buying and holding bitcoin, as executives said the company’s options to pursue leverage, yield or strategic partnership opportunities using its bitcoin will increase as the asset class continues to mature.

The Virginia-based analytics and business intelligence company is the world’s largest publicly traded corporate owner of bitcoin.

MicroStrategy now holds 125,051 bitcoins, which it has acquired for nearly $3.8 billion — an average price of $30,200. About 110,000 of the company’s bitcoins are not pledged as collateral and could be used to generate yield or to leverage, executives said during the company’s earnings call on Tuesday.

“In a world where, say, Goldman Sachs and Morgan Stanley and Merrill Lynch and Bank of America and CitiGroup and JPMorgan are interested and involved in the space, I think the options that will be available to us will be greater and the counter-party risk that we would have to incur will be less,” said CEO Michael Saylor.

MicroStrategy bought 10,300 bitcoins during the fourth quarter for an average price of $57,113. The purchases followed a capital raise through the firm’s at-the-market equity offering.

The firm revealed in a filing Tuesday that it purchased an additional 660 bitcoins between Dec. 30 and Jan. 31 for roughly $25 million in cash – amounting to $37,865 per bitcoin.

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MicroStrategy plans to continue using free cash flow to buy more bitcoin, and will also continue evaluating opportunities to raise additional capital as a way to purchase the digital asset, Saylor said. 

Saylor took a few minutes during the earnings call to tout the opportunity of investing in his company’s stock. He argued that MicroStrategy does not have the same capital obligations or competitive uncertainties that bitcoin miners have.

MicroStrategy compares favorably to bitcoin futures-based ETFs, Saylor added, noting the costs of rolling over the futures contracts. 

Even a spot bitcoin ETF, which the US Securities and Exchange Commission (SEC) has not yet approved, would carry a cost between 50 and 100 basis points, he explained.

Some industry watchers have said they do not expect a spot bitcoin ETF to come to market until at least 2023. As issuers wait for approval, the number of blockchain- and crypto-related ETFs continue to increase, and many have MicroStrategy among their top holdings. 

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