key takeaways
- MicroStrategy buys another thousand bitcoins, bringing their holdings to 140,000 at an average price of $28K
- Total Investment Now $4.2 Billion, Company’s Fortune Tied To Bitcoin Price
- CEO Saylor remains ultra-bullish, but has no affinity for risk management
- For Investors, Anyone Can Buy Bitcoin Directly
MicroStrategy is at it again.
software company, which is now essentially a BitcoinThe holding company has bought another 1,045 bitcoins. The company now has 140,000 coins, Michael Saylor’s now-trademark Twitter post announced the latest investment to the world on Wednesday.
MicroStrategy has acquired an additional 1,045 #bitcoin At an average price of $28,016 per bitcoin for ~$29.3M. by 4/4/2023 @MicroStrategy Holds 140,000 bitcoins 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 bitcoins is the largest holding of any public company. This is 0.72% of the entire supply, which means they currently own 1 out of every 138 bitcoins in circulation.
Satoshi Nakamoto and his estimated 1 million coins (5.2% of the supply) have a long way to go, but Saylor is on his way.
The latest purchases were closed at an average price of $28,016 per bitcoin, bringing the average price to $29,803, meaning the company is slightly underwater on its $4.17 billion investment.
Michael Saylor doesn’t do risk management
CEO Saylor’s convictions remain unwavering, while his disdain for portfolio diversification remains unchanged. To me, regardless of your thoughts on bitcoin as an investment, it’s hard to get on board with an investment of this scale.
The risk is extreme, with the fate of the company now well and truly in the hands of the cynical crypto gods. A look at the share price action shows how strongly it is now correlated with bitcoin. MicroStrategy lost three-quarters of its value last year as bitcoin plunged amid the bear market, but has doubled this year as bitcoin has bounced back.
Saylor’s conviction may be commendable, but his risk management is not. This is especially relevant when considering his rhetoric about giving people advice about what to do with their money – again, nothing to do with bitcoin, but the risk tolerance of everyday people. And the failure to understand the financial circumstances is shocking:
“Take all your money and buy bitcoin. Then spend all your time figuring out how to borrow more money to buy more bitcoin. Then spend all your time figuring out what you can sell to buy bitcoin.
And if you absolutely love the thing and don’t want to sell it, mortgage your house and buy bitcoin with it. And if you have a business 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 income to the hardest form of money on earth, which is bitcoin”
The interview was held in March 2021. Bitcoin was trading north of $56,000 at the time, almost double what it currently is. I sincerely hope that no one listened to this billionaire’s advice and mortgaged their home or business.
And again, this is not a discussion on the merits or price of bitcoin. The same argument would hold if bitcoin were $200,000 per coin now. Not that this needs to be said, but for the record, mortgaging your future and your entire financial well-being on an asset – and especially one as volatile as bitcoin – is, well, not good.
Yet, Saylor is determined to do just that with MicroStrategy. At least it’s a little less dangerous than putting your personal future at stake. But the reality is that with such a huge investment – 4.17 billion dollars! MicroStrategy is now a bitcoin holding company.
For investors, I’m not sure what the appeal is here, as one can buy bitcoin directly. However, to Sylar, he doesn’t care. It’s all inside.