- MicroStrategy CEO Michael Saylor reported via Twitter that MicroStrategy purchased an additional 7,002 Bitcoin.
- This purchase has the equivalent of $ 414.4 million from the sale of company shares.
- With this purchase, the holding of Bitcoin in the hands of the company is 121,043 BTC.
MicroStrategy, the trading data analytics firm, is not intimidated by the bearish sentiment of the crypto market and keep going increasing their holdings in Bitcoin (BTC).
On November 29, MicroStrategy CEO Michael Saylor reported via Twitter that the company had purchased an additional 7,002 Bitcoin, worth approximately $ 414.4 million.
The purchase occurred at an average price per BTC of $ 59,187. Money for the purchase came from the sale of company shares, which took held between October 1 and November 29.
With this purchase, the holding of Bitcoin in the hands of the company is 121,043 BTC. According to Saylor’s statements, the 121,044 BTC were acquired for $ 3.57 billion. This translates to an average price per BTC of $ 29,534 USD.
However, MicroStrategy’s acquisition of Bitcoin shouldn’t come as a surprise to the crypto community.
Too risky?
It is necessary to emphasize that, In August 2020, the company stated that it would be adopting Bitcoin as its reserve asset. In this sense, the company sees BTC as a reliable store of value and an attractive investment.
However, as the company increases its holdings in the leading crypto, its exposure to the volatility of Bitcoin also increases. While it is true BTC has experienced a long-term upward trend, we cannot forget that it has produced important downward movements in certain periods of time.
So while an individual investor may have the ability to withstand a significant price correction in the short term, a large company like MicroStrategy may not.
In this sense, an aggressive Bitcoin correction could destabilize the company’s finances. However, Phong Le, President and CFO of MicroStrategy, during the Q3 earnings call explained that the acquisitions in Bitcoin they are classified as “intangible assets of indefinite life according to the applicable accounting standards”, according to IAS 36.
What does this mean? Well what, In the event that the market value of Bitcoin falls below its book value, the company will recognize it as an impairment charge. That is, when the recoverable value of Bitcoin is less than its book value. And this implies that it can be used to legally offset your tax liability.
For example, as of Sept. 30, during the earnings call, Le reported that the book value of his BTC holdings was $ 2.4 billion, according to Fool.
Even so, the company’s shares are often affected by the volatility of Bitcoin. In this sense, other companies such as PepsiCo assure that depositing money in Bitcoin is risky.
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