Nasdaq-listed business intelligence firm MicroStrategy Inc. (NASDAQ: MSTR) has further increased its Bitcoin holdings, CEO Michael Saylor revealed on Tuesday. The company completed the acquisition of 16,796 additional bitcoins on September 14, 2020, at an aggregate purchase price of $175 million, inclusive of fees and expenses. This brings MicroStrategy's total Bitcoin holdings to 38,250 bitcoins purchased for an aggregate of $425 million to date.
Bitcoin as Primary Treasury Reserve
The latest purchase follows a new Treasury Reserve Policy adopted by MicroStrategy's board of directors. In a regulatory filing dated September 11, the company disclosed that the policy divides its treasury reserves into two categories: 1) cash, cash equivalents, and short-term investments held in excess of working capital needs; and 2) Bitcoin, which now serves as the primary treasury reserve asset on an ongoing basis, subject to market conditions and business cash requirements. The policy also allows for potential future increases beyond the initial $250 million investment.
CEO's Journey from Skeptic to Advocate
CEO Michael Saylor's stance on Bitcoin has undergone a remarkable transformation. In 2013, he tweeted that "Bitcoin days are numbered," predicting its demise similar to online gambling. However, by July 2020, Saylor announced a new capital allocation strategy during an earnings call, and MicroStrategy subsequently bought 21,454 bitcoins for $250 million on August 11. The crypto community has broadly interpreted these moves as extremely bullish signals for Bitcoin adoption.
Impact on Corporate Adoption
As the largest independent publicly-traded business intelligence company, MicroStrategy's decision to allocate a significant portion of its treasury to Bitcoin has set a precedent for other corporations. The firm's SEC filing emphasizes that Bitcoin holdings may grow further, reflecting a long-term conviction in the digital asset. Since MicroStrategy's initial Bitcoin purchase in August, the price of Bitcoin has risen significantly, validating the thesis for many institutional investors watching closely.