MicroStrategy borrows money to buy bitcoin

Michael Saylor, chief executive officer of MicroStrategy, is taking a different kind of strategy (no pun intended) in investing in bitcoin.

In a CNBC interview on July 31, Saylor said that investing in bitcoin today is as good as putting their billions in one of the leading tech companies back when the days these were cheaper.

MicroStrategy’s debt

Saylor said MicroStrategy has an accumulated loan of about $2.2 billion with an estimated 1.5% interest which he used to buy an enormous amount of bitcoin.

This, aside from the company’s cash flow, equity issuance, convertible and senior secured debt, and shelf registration which amounts to $1 billion.

He hinted that the debts his company incurred is nothing compared to the return on investment (ROI) bitcoin could give.

“I mean, if I could borrow $1 billion and buy Facebook a decade ago for 1% interest, I think I would’ve done quite well,” Saylor said.

Bitcoin reserves

Because of Saylor’s aggressive approach advertising about bitcoin in his social media account with over a million followers, MicroStrategy went from nearly unknown to become a force to reckon with in the stock market and in the virtual currency community.

The company said its reserves hold over 100,000 bitcoins and plan to acquire more even if it means borrowing more.

In its April-June net income report, it said the company is eyeing to add more bitcoin in its assets, even as it has experienced impairment of $424.8 million for its bitcoin asset.

Saylor believes that because of its multi-billion bitcoin purchases the company’s brand has grown by a factor of 100.

In the first half of 2021, the company’s bitcoin holdings were estimated to be worth $3.65 billion, at $34,763 per bitcoin market price during that time.

 

Image courtesy of Cointelegraph News/YouTube

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