Key Takeaways
- MicroStrategy has just acquired an extra 1,045 Bitcoin, taking their total to 140,000 at an average price of $28K
- The total investment is now $4.2 billion, with the company’s future tied to the Bitcoin price
- CEO Saylor is ultra-bullish, but has a disregard for risk management
- For investors, someone may as well just purchase Bitcoin directly
MicroStrategy is back at it.
The software company, which is now essentially a Bitcoin-holding company, has added another 1,045 Bitcoin to its portfolio. The company now holds 140,000 coins, with Michael Saylor’s now-trademark tweet announcing the latest purchase to the world on Wednesday.
MicroStrategy has acquired an additional 1,045 #bitcoin for ~ $29.3M at an average price of $28,016 per bitcoin. As of 4/4/2023 @MicroStrategy holds 140,000 bitcoin acquired for ~$4.17 billion at an average price of $29,803 per bitcoin. $MSTR https://t.co/IBufTxalnv
— Michael Saylor⚡️ (@saylor) April 5, 2023
MicroStrategy’s 140,000 Bitcoin stash is the largest holding of any public company. It constitutes 0.72% of the entire supply, meaning they now own 1 in every 138 Bitcoins.
The latest purchase was locked in at average price of $28,016 per Bitcoin, bringing the average price to $29,803, meaning the company is slightly underwater on the $4.17 billion investment.
Michael Saylor doesn’t do risk management
CEO Saylor’s faith remains strong, while his disregard for portfolio diversification is also unchanged. For me, regardless of your thoughts on Bitcoin as an investment, it is hard to get on board with an investment of this scale.
The risk is extreme, with the fate of the company now in the hands of the volatile crypto markets. A look at the share price action shows how tightly correlated it now is with Bitcoin. MicroStrategy lost three-quarters of its value last year as Bitcoin crashed during the bear market, but has doubled this year as Bitcoin has recovered.
Saylor’s faith is admirable, but his risk management is not. This is particularly pertinent when looking at his rhetoric regarding advising people on what to do with their funds – again, nothing to do with Bitcoin, but the failure to understand the risk appetite and financial circumstances of everyday people is alarming:
“Take all your money and buy Bitcoin. Then take all your time to figure out how to borrow more money to buy more Bitcoin. Then take all your time to figure out what you can sell to buy Bitcoin.
And if you absolutely love the thing and don’t want to sell it, go mortgage your house and buy Bitcoin with it. And if you’ve got a business that you love because your family works for the business – if it’s been in the family for 37 years and you can’t bear to sell it – mortgage it, finance it and convert the proceeds into the hardest form of money on earth, which is Bitcoin”
The interview occurred in March 2021. Bitcoin was trading north of $56,000 at the time, almost double what it is currently. I sincerely hope that nobody followed his advice and mortgaged their house or business.
And this is not a discussion on the merits or price of Bitcoin. The same logic would hold if Bitcoin was now $200,000 per coin. Not that it needs to be said, but for the record, taking such a large risk and your