Michael Saylor’s MicroStrategy is known for being the first publicly traded company in the world to put Bitcoin on its balance sheet to protect its reserves from inflation.
At the time of writing, the company is valued at $1 billion, while with 129,218 Bitcoin, it has nearly $4 billion worth of Bitcoin on its balance sheet. However, the majority of all Bitcoin it owns was bought with loans. In total, MicroStrategy has $2.4 billion in loans on its balance sheet.
What do the loans look like?
Most of the loans MicroStrategy has taken out to buy Bitcoin are so-called convertible loans. These are loans that are eventually converted into shares. In total, there are USD 1.75 billion in convertible loans on the balance sheet at an interest rate of 0 to 0.75 percent. With this, these loans make up by far the largest part of the borrowed money that MicroStrategy has used to finance their huge Bitcoin supply.
In addition, MicroStrategy has issued $500 million in corporate bonds. However, MicroStrategy pays an annualized interest of 6.1 percent on these loans, which are not converted into shares. Recently, it has also taken out Bitcoin-backed loans. In this way, Michael Saylor’s company has managed to raise $205 million from the market at an interest rate of around 4 percent. We can say a lot about MicroStrategy, but they do manage to get their Bitcoin creatively.
MicroStrategy in the min
At current rates, MicroStrategy’s big Bitcoin gamble is not looking good. The company has not had to write any extreme losses, but the total purchase value of the 129,218 Bitcoin stands at $3.97 billion. At today’s price, however, that Bitcoin is worth only $3.87 billion. That puts it at a virtual loss of $100 million.
However, MicroStrategy’s Bitcoin strategy is a long-term choice and the current price trend is a scenario that they have undoubtedly taken into account. After all, you can’t invest in something and expect to only win in the short term. So it’s not all roses and moons for Michael Saylor’s company, but suppose Bitcoin starts another bull run, then MicroStrategy could suddenly become one of the largest companies in the world very quickly.