Nasdaq-listed business intelligence firm MicroStrategy Inc. (NASDAQ: MSTR) has significantly expanded its bitcoin holdings, with CEO Michael Saylor revealing on Tuesday that the company acquired an additional 16,796 bitcoins on September 14, 2020, at an aggregate purchase price of $175 million, inclusive of fees and expenses. This latest purchase brings MicroStrategy's total bitcoin holdings to 38,250 bitcoins, acquired at a total cost of $425 million.
New Treasury Reserve Policy: Bitcoin as Primary Reserve Asset
Just days before the second purchase, on September 11, MicroStrategy had filed an update with the U.S. Securities and Exchange Commission (SEC) revealing that its board of directors had adopted a new Treasury Reserve Policy. The policy divides the company's treasury reserves into two categories. The first category includes cash, cash equivalents, and short-term investments held above working capital needs. The second category consists entirely of bitcoin, which the company now designates as its primary treasury reserve asset on an ongoing basis, subject to market conditions and anticipated needs for cash assets, including future share repurchase activity. The filing also noted that the company's holdings of bitcoin may increase beyond the initial $250 million investment under this new policy.
Two Purchases Total $425 Million
MicroStrategy first signaled its intention to invest in bitcoin during a July 28 earnings call, outlining a new capital allocation strategy. On August 11, the company announced its initial purchase of 21,454 bitcoins for $250 million (including fees). The second purchase on September 14 added another 16,796 bitcoins for $175 million. The two transactions together account for a total investment of $425 million, making MicroStrategy one of the largest publicly traded holders of bitcoin at the time. The cryptocurrency community has widely viewed these moves as extremely bullish, with many analysts noting that institutional adoption of bitcoin by a Nasdaq-listed company could pave the way for other corporations to follow suit.
CEO Michael Saylor's Evolution on Bitcoin
Michael Saylor, who now champions bitcoin as a corporate treasury asset, was once a vocal skeptic. In a 2013 tweet, he stated: “Bitcoin days are numbered. It seems like just a matter of time before it suffers the same fate as online gambling.” Seven years later, Saylor has completely reversed his stance, transforming MicroStrategy into a pioneer of corporate bitcoin investment. His personal evolution mirrors the broader shift in institutional attitudes toward digital assets.
Market Impact and Outlook
MicroStrategy's bitcoin purchases occurred when bitcoin was trading around $10,000 to $11,000 per coin. The company's average acquisition cost is approximately $11,111 per bitcoin (including fees). With subsequent price appreciation, the investment has generated substantial unrealized gains. The move has inspired other publicly traded companies, including Square Inc. and later Tesla, to allocate portions of their treasuries to bitcoin. Industry observers believe that MicroStrategy's strategy could accelerate corporate adoption of bitcoin as a legitimate reserve asset, potentially influencing treasury management practices across the globe.