Topic: MicroStrategy Buys Another 1,045 bitcoins for $29.3m (Read 319 times)

A little update, yesterday Microstrategy published its results for the first quarter of 2023, pdf available here:

https://www.microstrategy.com/content/dam/website-assets/collateral/financial-documents/press-release-archive/microstrategy-announces-first-quarter-2023-financial-results_05-01-2023.pdf

They finally noted a net profit, which apparently was their first profitable quarter in over 2 years. The net profit of $461m is largely a result of a huge tax credit of $453m.

Some positive press coverage:
https://markets.businessinsider.com/news/currencies/bitcoin-microstrategy-michael-saylor-bull-quarter-cryptocurrency-rally-crypto-70-2023-5

If you're convinced that Bitcoin is here to stay and that it'll keep outperforming other assets, then it makes sense to convert any spare cash into bitcoins. The problem starts when you buy bitcoins with borrowed money and when you're making losses on your principal business operations.
I don't know the exact number, but I think Microstrategy would be forced to sell long before bitcoin would hit as low as $5k.

Apparently, they only sold that to get some tax benefit and bought another 810 btc two days later.

This is not the company I would state is the greatest backer or believer, it has to be users who rate first.   Imagine the yield they could get using all this BTC in a casino setup.  Seems a shame not to actually use it in any way and is the idea of MS is to just store it for plain appreciation.  I got a feeling the yield and usage could be the more profitable avenue, I know BTC does go up alot but why not do both things in some way.  They could be guarantor without ever letting them go, people write contracts on shares and all kinds of assets with the trade only taking place at a certain condition being passed and before that you receive a premium its a bit like insurance policies most are never used.  

To be fair there are tens of thousand of companies that bought bitcoin in the world, so they are not the only one. But given the sheer amount of bitcoin they bought, I am pretty sure that even though I do not have a concrete proof of it, I am sure that they are the one with most bitcoins on their accounts.

If there is another company that has over 100k+ bitcoins and we are not aware of it (aside from exchanges who hold our coins for us) then it would be a shocking news, usually those type of things are heard even before it happens, and certainly discussed a lot after it happens. So microstrategy may not be the only one, but it is certainly the biggest and richest one that has ever done something like this so far, many to follow hopefully.

I believe that Microstrategy is the only company that has proven its deep belief in Bitcoin. It can be said that most of those who claimed to believe in Bitcoin got rid of it at some point, while Microstrategy has withstood despite all the strong decline that occurred and the serious problems it faced.

So the company is currently in a very good position and I'm confident they are moving forward with a great team who believe in Bitcoin and really know what they're doing. The future belongs to such companies that are determined to succeed in spite of everything.

I really hope that their strategy will be cool on the long terms. Image what will happen to them if Bitcoin (for any kind of reason) will drop to 5k dollars (for example). It is a really high-risk bet, and I don't understand why

they are only focused on Bitcoin instead to put also an eye on other project like Ethereum that is expected to be more profitable than Bitcoin.

You're right, because truly HODLing Bitcoin in their treasuries and actually believing in Bitcoin's ethos like Chad Saylor requires a small amount of insanity.

 

Although, Apple did include the Bitcoin white-paper hidden in every copy of macOS since 2018.

With the price in the 30k range, Microstrategy is officially in the profit on their Bitcoin holdings, so I'm not sure if there are many memes from "haters" at the moment, as the timing is not the best for that.

But not every critique of Saylor's actions is "hate on crypto", there are some valid concerns coming from the bitcoin/crypto community.
Having one entity holding massive amount of bitcoins is never desired, especially when that entity is making losses on their core operations and is likely funding its bitcoin purchases with loans.


The purchase itself surely may have some positive effect on the price, but the news is not seen by many as particularly bullish, as mentioned above.

I am watching lot of memes about this move especially on Reddit because once Michael Slayer said bitcoin is gamble so don't invest now their company itself in the process of accumulating more bitcoins so what can we expect from the haters of cryptocurrency about this.

This news also contributed towards the pushing further price of bitcoin and who knows we are at the beginning of the new bull run so if the history repeats again 30K is just nothing compared to its previous stats in percentage we can expect $150K or even 200K per bitcoin as the new ATH in my opinion.

That $161m loan was less than 6% of their total liabilities at 31/12/2022 and from the Balance Sheet perspective, this doesn't make much difference. They have $161m less liabilities now, but, if they repaid with cash, they also have $161m less assets.
And what did they buy the next batches of bitcoins with? I'm guessing they took another loan(s).


I'd be guessing that they keep borrowing. Repaying one loan and drawdown another.
But that's the point, it looks like they're ready to bet it all on Bitcoin and neglect the core of the business. The question is to what end? Even if things go their way, will they not dump at the next ath? Will they be holding forever only realising modest amounts? I doubt most shareholders would be happy with that.

Do not be worried, companies usually run by negative book and they do not end up with profit until very late, and this is the type of company that could never do that because all their money goes to crypto. But remember, this is the same company that owns tens of thousands of bitcoin, so one good breakout price increase on bitcoin and they would be in big profit as well.

So, they are handling things like it is right now, and even without selling any of their crypto, as long as the price goes up that would mean they are in profit, and they don't need to sell it. They just keep holding and it "looks" like they are in the negative, but the company is doing fine and should not be an issue at this moment. Maybe later if it grows bigger.

He will never sell! Chad Saylor's Bitcoin "gamble", if Bitcoin surges to six digits/near seven digits, will probably be written in history books as one of the greatest investment decisions of all time, possibly comparable to those great investing barons of the past like when Cornelius Vanderbilt bought most of the rail road companies when they were in a DIP.

So he is finally back at break even. Very crazy how he started out with a good dollar average and then by buying high he put himself in a huge bad bag holding position for over a year. Very glade that he wasnt margin called below $20K like many said he would.

Now we just need to make sure he doesn’t start dumping. Due to the state of the economy he might be forced by his shareholders or management to lighten his load and scale out. If we see that during his earnings report then I’ll cause a sell off obviously.

They already have BTC's before and that have dumped as well but that doesn't stop them for buying again even if BTC lately is rising. People must learn from them. They are not scared even if there is a big amount involved but average people who can only risk tiny amounts are shaking when their investment goes down. They are only planning to sell at a loss. This is a wrong initiative. There are still lots big investors out there so don't worry because MicroStrategy can't dominate this market. BTC are still safe from manipulations.

For now, we must only appreciate the actions that they are making because this helps push the price outside the $30k mark

Worth noting they paid off their Silvergate loan last month from back in March last year:


They also bought another chunk of coin last month after that:


Source: https://www.coindesk.com/business/2023/03/27/microstrategy-pays-off-silvergate-loan-buys-more-bitcoin/

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So actually their most recent purchase of 1,045 bitcoins is actually much less than last month for reference sake, or their previous leveraged loan it seems.

Their earnings have been down since 2020 I noticed though, so does raise questions as to where they are getting the cash from...

Yeah, this whole thing doesn't sit well with me -- I was actually pretty chuffed at the initial MS news before, not that I follow much or care much for institutionals, but the move itself, and then Saylor's interviews after, made me think he was pretty damned progressive.

But what happened last year and now this, feels like he's regressing more into gambler mentality more than anything else. Hard to see how they had excess cash in the first place, especially if he had to survive sub-20k levels. Getting into debt then actually would have settled nerves but now when there's still uncertainty in whether the economy's done purging?

Nope, currently their net book value is negative. It doesn't look like they bought bitcoins with the excess cash, but rather went into debt to buy it. Unless they're able to turn things around quickly, looks like their only bet is on BTC going up in the near future.


What's more, if nothing changes, this means they will likely be dumping large amounts whether BTC goes up or down:
- if it goes down, they will be facing liquidity problems and will be forced to sell.
- if it goes up, shareholders will want to realise their profits at what they'd consider a top, rather than seeing their long-awaited gains being eaten up by unprofitable operations or risking going through another dump.

So what actually makes you feel secure here?

I do not think that it would be a bad idea for a company to run as long as they have reasonable debt. That's how companies grow and that should be something that we ended up doing as well as we can to grow as well.

Debt and losses are not as big of a deal as you might imagine, they are just doing something that would make it even more profitable, you make 1 then debt2, and start making 3, debt is over? get 5 debt and start making 10, that is how they grow. Amazon had debt and made a loss up until like maybe 10 years ago and that means they were able to grow bigger than people expected and that's how it should be done. I know people are not going to be super excited to see their favorite crypto company losing money but it's fine.

I'm sure some people and smaller entities are holding MSTR as a proxy for bitcoin, but I don't think it would be smart for a company as gigantic as Apple to do so. Unless they buy enough shares to have a good amount of control over MicroStrategy, it adds a lot of unnecessary risk and complications simply because MicroStrategy is still a company with products and not solely a bitcoin-holdings company.

So far they are still not in profit due to the fluctuations of Bitcoin but eventually when the market recovers, for sure they will have more profit in the future. Its scary though how they become more dominant in this market, imaging having that huge holdings can totally affect the price of Bitcoin and cryptomarket itself, they are slowly increasing their exposure which can be a big threat in the future.

Seeing company keep on stockpiling Bitcoin makes me feel secure of the future price of Bitcoin.  For me, this means the company even though not performing well in their operations believe that Bitcoin will make them recover their losses and even give them profit in the long term.  This means if we go with the flow of buying Bitcoin today, there is a huge possibility that Bitcoin will give us huge profits in the future.

I do not think that the company will dump its bitcoin prematurely.  Before they do this acquisition I am sure they have enough fund for their operation until the next ATH of BTC (where they probably dump part of their holdings).

How would creating crypto-division make any difference though? When you buy MSTR stock, you're buying shares of the entire group. And that would be a very unattractive way of investing in Bitcoin, since their stock price is also largely dependent on the performance of their principal activities.

I'm not quite sure why is the Bitcoin holding impairment loss included in the operating results, unless crypto-investing is considered a part of their normal business operations. But that loss is very real - they bought in higher than the current price, so the value is lost and they have less money than they had before. There are no accounting rules that would allow keeping such loss off the records.

And if you propose that BTC impairment loss should be ignored - then, consistently we should ignore the btc asset in the balance sheet, which would increase the Total stockholders’ deficit from ~$383 millions to ~$2.2 billions, making their shares worth less than a toilet paper.

I guess your point was that they could keep going even when bitcoin keeps dropping, but I don't think that's the case. That would only be true if they bought bitcoins with some excess cash that they didn't really need, but currently their total liabilities exceed their total assets by $383m and that's including their $1.8b btc holdings (at 31 Dec 2022).

Link to press release with complete quarterly and annual figures:
https://www.microstrategy.com/content/dam/website-assets/collateral/financial-documents/press-release-archive/microstrategy-announces-fourth-quarter-2022-financial-results_02-02-2023.pdf

ps. "Provision for (benefit from) income taxes" is just a funny wording for "tax charge/(credit)". It simply represent corporation tax (+ deferred tax), and as it includes multiple elements (i.e. tax losses carried forward, tax reliefs etc) it sometimes can result in credit for the year rather than charge.

Microstrategy has become a way for funds to get exposure to Bitcoin without having to hold it themselves, declare that they’re holding Bitcoin, or create new divisions of their company to handle crypto. They just have to add Microstrategy to their portfolios, and they are. I wonder if a spot ETF would have the major holders sell and buy the ETF instead.

Personally I don't see this as a concern, based on Saylor's belief and purpose in holding Bitcoin. It's purely as a reserve asset, better than cash reserves, as opposed to speculating on turning a profit. Ultimately he's aware that his stock won't be able to outperform Bitcoin long-term, only keep up with price at best, and by holding Bitcoin reserves as opposed to cash MSTR stock does much better.

Pople forget that MSTR stock was basically a shitcoin until they started buying Bitcoin (down 95% from ATH after 20 years). So if they were to start selling, it'd likely return to it's shitcoin status. The only reason I can see them selling is if they need to access their reserves due to liquidity issues with Microstrategy - as ultimately that's the purpose of having these reserves, in order to act as a back up.

So in summary the only issue with MSTR holding so much Bitcoin is if they go bankrupt and go into liquidation, then the BTC reserves would be dumped. That's the real risk here, which is probably quite low.

Be like Giga-Chad-Saylor. No charts, no research, no leverage, no strategy, no shitcoins, only Bitcoin and bids whenever he believes it's the right time, then becomes one of the largest HODLers of Bitcoin.

 

His results during the next bull cycle? Priceless.

DCA is one thing but if he ever has to sell then he should choose to do so on higher prices and buy on lower prices.  It seems BTC is best suited to unleveraged users but I dont think he does use the BTC and is his business really described as unleveraged.  Just seems worrying he only ever buys when a normal operation cant just do only a buy and call it a strategy, personal users sure thats fine so long as the cash is spare to them that can be ok but not a business imo.


That can be true of the market in general, people will take profits at 50k or whatever level.   Thats why I imagine its at least this whole year to further consolidate and build, not too bullish while retracking prior pricing.

Notice in those financials that there is a line for digital asset impairment. Because the rules for holding cryptocurrencies on the balance sheet had not yet been established so a company is forced to actually include paper losses from cryptocurrencies as real losses on their financials.

So of the $1.469 billion "loss" they took that year, $1.286 billion of that was bitcoin paper losses. Which means the company actually took a $183 million loss for the year, not $1.469 billion.

Still, not great they took a loss for the year of course, but they aren't losing anywhere near as much as the financial numbers make it sound like.


Notice they made about $300 million the previous year when you account for the bitcoin impairment "loss".

In 2022 you can see their revenue went down slightly, their cost of revenue went up slightly and their operating expenses went up slightly. None of that is too bad. Their interest expense doubled which presumably is from paying interest on loans for bitcoin, remember they just paid off their Silvergate loan so this year their interest expenses should go down significantly.

The main difference is the line called "Provision for (benefit from) income taxes". I have no clue what that is but that went from helping them by $275 million in 2021 to hurting them by $147 million in 2022. That's the main difference between the years right there, though I don't know what that is. If you exclude that they made $20 million in 2021 and and lost $36 million in 2022. But since I don't know what the "Provision for income taxes" is I have no clue why that changed or if that will continue to be a problem in the future or not.

I wasn't talking about the BTC price that would force them to sell, but about Microstrategy's poor performance. Let's not forget their not some fund that just holds bitcoins but an actual business offering services, that also happens to hold bitcoins.

If they keep making huge losses, then it's inevitable that they will be forced to sell eventually. And their recent results do not spark optimism:



Note - the results are presented in thousands, meaning they recorded a net loss of $1.5bn for the year ended 31 Dec 2022.

Yes this is going to be an issue. Say we start to rally to $40-60K or so. And what is going to happen if MSTR earnings are released and it shows that they sold a bunch of Bitcoins. What will happen to bitcoins price then? I'll be similar to Tesla when they started to sell their bitcoin holdings.

People will think they are going to dump billions on the market and they will start to sell their bitcoins before MSTR starts to take profits. Right now we dont have to worry because he is at break-even pretty much. Make no sense for him to sell at $30K, however I can see him taking profit this time at $50K if we get there in the near future.

These guys are really a crypto company in reality, maybe they act as if something else but they are really a crypto company. They don't even need to do anything else right now, they can just sell everything else and buy bitcoin with it and just hold bitcoin, that would be good enough.

When the bitcoin price goes up, the valuation of the company would go up, and the stock holders share value would go up as well. That type of company doesn't exists right now as far as I know, and they can be the first one. Considering bulk of their money is in bitcoin right now, they are not really that far away from this to become reality anyway, it's quite realistic and could happen.

It's definitely not preferable, but that's simply how free markets work — larger entities will be able to stock up on far more bitcoin simply because of the capital advantage.

But in the end — regardless what they'll end up doing to their BTC, it is what it is. Anyone is free to purchase and dump bitcoin as much as they want.

Well, better head over to the board @fillippone made about MicroStrategy that talks about it there even @fillippone has spreadsheet notes for every purchase they make.

It's a lot of separate threads regarding buying MicroStrategy so it's going to be very conflicting.

Their buying journey from 2020 until now is still continuing: https://buybitcoinworldwide.com/microstrategy-statistics/

At least MicroStrategy will not sell for the short term, obviously they are more serious for the long term. See what has been done recently, this indicates that this institution will continue to accumulate much more.

But their sales target is still a mystery.

Microstrategy is no doubt responsible for Bitcoin’s continued strength with all their buying support. However, I’ve been saying for a while now that it makes me uncomfortable with how much BTC they have. It sort of goes against what Bitcoin is about to have so many coins centralized in one entity.  At some point Microstrategy will be doing more harm than good and I think we’re nearing that point.

It is better that all news related to MicroStrategy be updated here -----> MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’

They have been making continuous purchases for the past two years and creating a separate topic for each purchase will reduce the quality of posts.

Their average purchase of Bitcoin is still $29,000, although they bought a lot when the price was less than20k, which means that their short-term strategy is not profitable, or at least it is not a green signal for anyone who wants to predict the price or buy.

I think they were like us, when bitcoin plummeted but they didn't have the money to invest. Despite being a large business, it is not always possible to have the money to invest in bitcoin, especially when the economic situation is crushing large corporations in the world. They hold a huge amount of bitcoin, and many people fear that they will dump it, but I would be very excited if they did. I don't know what the reason is, but as long as bitcoin is cheap, I think it's an opportunity to seize, not panic. Because no matter what they do, bitcoin will always bounce back.

If you have followed the history of MicroStrategy you would have noticed that it is their vision, firm belief and not the price of bitcoin that drives them each time they buy more bitcoins. Even when the price of bitcoin was dropping and the public thought that they would sell off their bitcoins, they didn't. I think one they have a visionary leader who during the bear market assured investors that they weren't dumping bitcoin and secondly, their shareholders isn't mounting any pressure on them to sell.

I doubt they will dump it, considering how hard they hold on to it even after last years bearish method. Had they have that intention and could panic then they could have sold it just at the 20k mark after accumulating it. Now they have an average price of $29,803 to each bitcoin which I see is a very good price considering where the current price is right now pre halving period. I just don’t understand why they actually buy Few in the DIP or is this another DCA method that could work potentially.

They are pretty much at break even after those huge buys at $50K plus range. I remember when he first announced he bought Bitcoin at $10K. His average before the huge bull market was like $11111 eventually but those huge buys really messed up his average cost.

He does DCA but not with similar amounts. He bought more at a higher price and less at a lower price. Either way looks like next month he’ll be at break even or so. I remember his stock went crazy during the bull market.

Microstrategy bought more bitcoin

Can it go south to the recent lowest price of bitcoin during last year ending? Bitcoin was at $15500 or so at the time. Yet, Microstrategy survived.

As in topic's subject: MicroStrategy Buys Another 1,045 bitcoins for $29.3m:

https://www.coindesk.com/business/2023/04/05/microstrategy-buys-another-1045-bitcoin-for-239m/

^ in the article there's a typo, they've spent $29.3m not $23.9m.

https://twitter.com/saylor/status/1643586872839471105?t=L7IzW6T8ltWlRp-9pB3Oow&s=19

How does it make you feel that the company that is not doing very in terms of operating profitability is further increasing its exposure to Bitcoin, and now sits at 140,000 bitcoins. I'm a little uncortable with a thought that if things go further south for them, they might be forced to dump it all on the market.