Nasdaq-listed MicroStrategy Inc. (NASDAQ: MSTR) has expanded its Bitcoin holdings once again, purchasing an additional 16,796 bitcoins for approximately $175 million, inclusive of fees and expenses. The company now holds a total of 38,250 bitcoins acquired at an aggregate purchase price of $425 million. CEO Michael Saylor revealed the news via Twitter on September 14, 2020, stating that the purchase was completed on that same day.
New Treasury Reserve Policy: Bitcoin as Primary Reserve Asset
In a regulatory filing with the U.S. Securities and Exchange Commission (SEC) dated September 11, MicroStrategy disclosed that its board of directors had adopted a new Treasury Reserve Policy. Under this policy, the company's treasury reserve is divided into two asset classes. The first includes cash, cash equivalents, and short-term investments held in excess of working capital needs. The second consists of bitcoin, which will serve as the primary treasury reserve asset on an ongoing basis, subject to market conditions and anticipated cash requirements for business operations, including potential future share repurchases. The filing explicitly noted that the company's bitcoin holdings may increase beyond the initial $250 million investment.
Two Major Purchases: From $250 Million to $425 Million
MicroStrategy first signaled its intention to buy Bitcoin during an earnings call on July 28, 2020, outlining a new capital allocation strategy. On August 11, the company announced its first purchase: 21,454 bitcoins at a total cost of $250 million. The second purchase, announced on September 14, adds 16,796 bitcoins for $175 million, bringing the cumulative total to 38,250 BTC. The cryptocurrency community has widely viewed these two moves as highly bullish for Bitcoin, as they represent a significant endorsement by a publicly traded company with a market capitalization in the billions.
CEO Michael Saylor's Transformation from Skeptic to Evangelist
Interestingly, Michael Saylor was not always a proponent of Bitcoin. In a 2013 tweet, he wrote: “Bitcoin days are numbered. It seems like just a matter of time before it suffers the same fate as online gambling.” By 2020, however, Saylor had undergone a complete transformation, becoming one of Bitcoin's most vocal advocates. He not only convinced MicroStrategy's board to adopt Bitcoin as a primary treasury reserve asset but also personally championed the strategy, which has since inspired other corporations, including Square and Tesla, to add Bitcoin to their balance sheets. MicroStrategy, which describes itself as “the largest independent publicly-traded business intelligence company,” has set a precedent that many believe could accelerate institutional adoption of Bitcoin as a legitimate treasury asset.