Microstrategy (Nasdaq: MSTR) has seen its Bitcoin investment swell to a market value of $6.915 billion as of early December 2023, netting a profit of over $1.6 billion on a total cost of $5.314 billion, representing a 30.12% return. The gain comes as Bitcoin's price surged past $39,000, making Microstrategy the largest corporate holder of the cryptocurrency, excluding governments and exchange-traded products like Grayscale's GBTC.
Microstrategy's Bitcoin Holdings and Profit Breakdown
The company currently holds 174,530 BTC acquired at an average price of $30,252 per coin. At prevailing exchange rates, these holdings are valued at $6.915 billion, yielding an unrealized profit of $1.601 billion. This success is largely attributed to Microstrategy's disciplined dollar-cost averaging strategy, which allowed it to accumulate Bitcoin during price dips. Meanwhile, MSTR stock has soared 167% over the past year and 262% year-to-date, with a 22% gain in the last month alone.
What If Microstrategy Had Chosen Ethereum?
An intriguing hypothetical scenario via blockchaincenter.net suggests that if Microstrategy had invested the same amount in Ethereum (ETH) instead of Bitcoin, its returns would have been nearly twice as high. The firm would currently hold around 4.26 million ETH, worth approximately $9.245 billion, translating to a 74% profit ($3.931 billion). Additionally, staking that ETH at a 4% annual percentage yield (APY) could have generated another $869.4 million, bringing total value to $10.114 billion.
Despite the higher hypothetical returns, Microstrategy CEO Michael Saylor remains a devoted Bitcoin maximalist, famously declaring “There is no second best crypto asset.” The company has consistently rejected diversification into other cryptocurrencies, viewing Bitcoin as the only long-term store of value. Saylor has stated that Bitcoin's scarcity and security make it superior to all other digital assets.
Market Position and Outlook
Microstrategy's Bitcoin stash represents 27.92% of Grayscale Bitcoin Trust's holdings, highlighting its enormous exposure relative to other public and private firms. In global market capitalization rankings (including ETFs, cryptos, and precious metals), Microstrategy ranks 1,768th, while Bitcoin itself ranks 11th globally, just below Berkshire Hathaway. As Bitcoin continues to mature, Microstrategy's paper profits may expand further, but investors should remain cautious about the inherent volatility of cryptocurrency markets and regulatory uncertainties.