MicroStrategy Amplifies Bitcoin Bet with $2.13 Billion Acquisition, Bolstering Holdings Amidst Market Dynamics

In a bold move that underscores its unwavering commitment to Bitcoin, enterprise software giant MicroStrategy (MSTR) executed its largest single Bitcoin acquisition in over a year. According to an 8-K filing with the U.S. Securities and Exchange Commission (SEC) on Monday, the company acquired an additional 22,305 Bitcoins between January 12 and 19. This substantial purchase, valued at approximately $2.13 billion, was made at an average price of $95,284 per Bitcoin.

Michael Saylor, Co-founder and Executive Chairman of MicroStrategy, confirmed the company’s updated Bitcoin treasury. MicroStrategy now cumulatively holds an impressive 709,715 Bitcoins, with a current market value estimated at $64.5 billion. Since embarking on its pioneering Bitcoin acquisition strategy in 2020, the company’s total investment stands at approximately $53.9 billion, yielding an average acquisition cost of $75,979 per Bitcoin.

Currently, MicroStrategy’s Bitcoin holdings reflect an unrealized profit of approximately $10.6 billion. This monumental accumulation positions MicroStrategy as a dominant force in the digital asset space, with its holdings representing a significant 3.3% of Bitcoin’s finite 21 million coin supply.

The funding for this latest acquisition was strategically sourced through a combination of common stock and perpetual preferred stock sales. Last week alone, MicroStrategy divested approximately 10.39 million shares of its MSTR common stock, generating $1.83 billion. Additionally, the company raised $3.4 million and $294.3 million respectively through the sale of its Strike (STRK) and Stretch (STRC) perpetual preferred shares.

These preferred share issuances are integral to MicroStrategy’s ambitious “42/42” fundraising initiative. This program encompasses four perpetual preferred stocks – STRK ($21 billion), STRC ($4.2 billion), STRF ($2.1 billion), and STRD ($4.2 billion) – with a collective goal to raise $84 billion by 2027 through a mix of equity and convertible bond offerings, specifically to finance further Bitcoin purchases.

Navigating Market Volatility: Performance and Resilience

Despite MicroStrategy’s unparalleled Bitcoin accumulation, the company’s stock performance has recently faced headwinds. Data from Bitcoin Treasuries indicates a broader trend among the 194 public companies that have adopted Bitcoin as a reserve asset, where the market capitalization to net asset value (mNAV) ratio has been significantly contracting.

MicroStrategy itself exemplifies this trend, with its stock price having retreated 62% from its peak last summer. Currently, the company’s mNAV stands at approximately 0.85, signifying that its total market capitalization is less than the intrinsic value of its Bitcoin holdings.

Addressing these market concerns, Michael Saylor has consistently asserted that MicroStrategy’s capital structure is “engineered for extreme scenarios.” He emphasizes the company’s robust financial framework, capable of sustaining operations even if Bitcoin prices were to plummet by 90% and remain stagnant for an extended period of 4 to 5 years.

While acknowledging that such a scenario would undoubtedly cause “pain” for shareholders, Saylor assures that the flexible allocation of equity, convertible bonds, and preferred shares ensures the company’s financial stability and operational control, reinforcing its long-term vision for a Bitcoin-centric treasury strategy.