In August and September, MicroStrategy made headlines when it deployed $425 million into Bitcoin over the span of tens of thousands of buying orders. In total, the business services company acquired more than 38,250 bitcoin, for an overall cost basis of $11,111 per coin.
This investment represented a large portion of the firm's treasury, which was then sitting dormant, being inflated away by the printing of fiat dollars.
While the investment has only been in place for mere months, MicroStrategy is already recording massive unrealized profits. When Bitcoin passed $13,727 today, shooting straight across $14,000, it became official that MicroStrategy has made an unrealized $100 million profit on its investment in the leading cryptocurrency.
MicroStrategy CEO Michael Saylor is also up largely on his personal Bitcoin investment. While it is usually not advisable to disclose your holdings, Saylor shared his on October 28th, stating he "HODLs" 17,732 bitcoin that he acquired at $9,882 per coin on average. This means that his initial investment was worth $175.2 million. His Bitcoin stash currently boasts a value of $243 million, implying an unrealized profit of approximately $67.8 million.
As a related aside, $80 billion financial technology company Square is up $14 million on its Bitcoin investment. At this point, all institutional and corporate investors in Bitcoin are in profit on their allocations to Bitcoin, data from Rodolfo "NVK" Novak's site Bitcoin Treasuries shows.
MicroStrategy has no intention to sell any coins, despite its unrealized profits dramatically bolstering its balance sheet. In fact, in its Q3 earnings call, MicroStrategy president Phong Li indicated that the firm is open to buying more bitcoin given its investment potential and the ability to bolster MicroStrategy's profile:
You should expect that we will purchase additional bitcoin as we generate cash beyond what we need to run the business on a day-to-day basis […] We’ve seen a notable and unexpected benefit from our investment in bitcoin in elevating the profile of the company in the broader market.
As Saylor has explained in interviews and press releases, there is a material benefit in owning bitcoin over holding cash.
In the press release announcing the company's first foray into Bitcoin in August, Saylor was quoted saying that Bitcoin is a "dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash."
The entrepreneur elaborated that in the current macroeconomic environment, where there is uncertainty in the economic and health state of the world, Bitcoin makes increasing sense:
We believe that, together, these and other factors may well have a significant depreciating effect on the long-term real value of fiat currencies and many other conventional asset types, including many of the assets traditionally held as part of corporate treasury operations.
Saylor has said MicroStrategy plans to hold bitcoin for "100 years," making clear that these coins are unlikely to be sold unless there are expenses to cover.
MicroStrategy is likely to be one of many firms owning bitcoin in the future, analysts argue.
As the BTC Times reported, Unchained Capital's Parker Lewis recently noted that Microsoft alone holds $123 billion in "short-term investments" and $13.5 billion in cash equivalents, for a total of $136.5 billion. These are holdings that are being inflated away rapidly in the most centrally stimulated environment in history.
In all, corporations are expected to hold trillions of dollars worth of assets, all of which are falling victim to currency devaluation.
As more technology companies make the ranking of the largest corporations, the especially seem to struggle with a cash problem, making them prime contenders to adopt Bitcoin.
As of the end of the second quarter, Alphabet, Google's parent company, held $17.7 billion in cash and $103.3 billion in short-term investments, while Apple held $33.3 billion in cash and $59.6 billion in short-term investments.
Real Vision chief executive Raoul Pal believes that in the coming years, the tech giants with dozens will have Bitcoin on their balance sheets.
Pal also thinks that the cryptocurrency will act as a "life raft" that will shoot to $1,000,000 in the coming five years thanks to institutional adoption, macroeconomic trends such as inflation, and the digitization of the world due to the pandemic.