MicroStrategy Doubles Down on Bitcoin with $2 Billion Move

Ever wonder just how bold someone has to be to bet billions on Bitcoin? Well, MicroStrategy’s co-founder Michael Saylor isn’t just testing the waters; he’s diving in headfirst! Saylor started piling into Bitcoin back in 2020 as a hedge against inflation, initially funding the purchases with company cash. Over time, though, he upped the ante, leveraging stock sales and convertible debt to buy even more. Just recently, the company snagged another 27,200 Bitcoins for roughly $2.03 billion in cash, averaging around $74,463 per bitcoin (fees and expenses included), cementing its place as the largest corporate Bitcoin holder outside of BlackRock’s Bitcoin-focused ETF. Since August 2020, MicroStrategy’s stock has surged by over 2,500%, outpacing even tech titan Nvidia, while Bitcoin itself has climbed around 660%. 

Today, their Bitcoin stash alone is valued at a jaw-dropping $24 billion, with prices reaching a new record high of over $86,500 per coin. Even President-elect Trump seems on board, giving Bitcoin a nod as a legitimate asset. So, maybe it’s true what they say—fortune favors the bold!

What’s the Deal with MicroStrategy’s Wild Bitcoin Ride?

As of November 10, MicroStrategy and its subsidiaries, based in Tysons Corner, Virginia, had accumulated around 279,420 Bitcoins. Their total Bitcoin purchases came to roughly $11.9 billion, averaging about $42,692 per Bitcoin, including all fees and expenses. On Monday, MicroStrategy’s stock surged by 24%, hitting a record $335—surpassing the previous peak reached in March 2000, when the company was a hot favorite during the dot-com boom. Interestingly, back in December 2000, Michael Saylor and two other MicroStrategy executives agreed to pay $11 million to resolve fraud charges from the US Securities and Exchange Commission. The SEC had alleged that they had inflated the company's financial results for nearly two years. 

How did MicroStrategy’s founders find conviction in Bitcoin?  

MicroStrategy’s co-founder and Chairman Michael Saylor, saw Bitcoin as a transformative solution to hedge against inflation and protect the company’s assets. In 2020, with global economic uncertainty rising, Saylor recognized the potential of Bitcoin as “digital gold” — a decentralized asset with limited supply that could store value over time, unlike traditional currencies. This led him to make a bold decision: pivoting the company’s cash reserves into Bitcoin to protect and grow MicroStrategy’s wealth in a way that outpaced traditional investments. 

This belief only strengthened as Bitcoin’s value surged, allowing MicroStrategy to outperform most major U.S. stocks. Inspired by Bitcoin’s independence from traditional market forces, MicroStrategy went even further, raising funds through stock sales and convertible debt to expand its Bitcoin holdings. And that’s how, today, the company’s commitment to Bitcoin reflects the founders' deep conviction that the digital asset is both a long-term store of value and a viable path to future-proofing the business.

Let’s See What’s in Store

MicroStrategy recently announced two major stock sale agreements to help fund its Bitcoin buying strategy. In August, it signed a Sales Agreement with TD Securities, The Benchmark Company, BTIG, Canaccord Genuity, Maxim Group, and SG Americas Securities, allowing for the sale of up to $2 billion in Class A common stock, at $0.001 par value per share. Then, on October 30, 2024, MicroStrategy expanded with another Sales Agreement, this time involving Barclays Capital,  Cantor Fitzgerald, Mizuho Securities, TD Securities, The Benchmark Company, BTIG, Canaccord Genuity, Maxim Group, and SG Americas Securities. This October Sales Agreement allows up to $21 billion in stock sales over time.  As of November 10, 2024, MicroStrategy had already sold 7,854,647 shares across both agreements, netting approximately $2.03 billion after commissions. With the August agreement largely fulfilled, the company will proceed with further stock sales under the October Sales Agreement. 

Looking ahead, MicroStrategy’s unwavering commitment to Bitcoin positions it as a leader in corporate cryptocurrency investments. As Bitcoin gains broader acceptance, especially among institutional investors, the company’s role in the space is likely to grow. However, with Bitcoin’s notorious price volatility, MicroStrategy’s future success will depend on how well it manages market swings while using Bitcoin as a strategic asset to protect and possibly boost shareholder value.

What We Can Learn from the Story

• Strategic Vision: MicroStrategy views Bitcoin as a long-term hedge against inflation, betting on its potential as “digital gold.” 
• Funding Strategy: The company raises capital through stock sales and convertible debt, reinvesting proceeds into Bitcoin to maximize buying power. 
• Risk Management: While Bitcoin offers upside potential, its volatility is a significant risk factor, making this strategy suitable for high-risk-tolerant investors.
  
• Industry Influence: MicroStrategy’s moves could set a precedent for other companies considering Bitcoin as a corporate asset, potentially influencing future corporate finance trends.
  
• Market Outperformance: Since adopting its Bitcoin strategy, MicroStrategy's stock has outperformed many major stocks, benefiting from Bitcoin’s value growth. 

Bitcoin investment and market sentiment have only risen after Trump’s win and it doesn’t look like it’s stopping anytime soon. Stay tuned for more stories like this and don’t forget to subscribe to our weekly newsletter!