, Bitcoin’s Biggest Corporate Backer Invests Another $500 Million As Crypto Prices Crash, The Nzuchi News Forbes

Bitcoin’s Biggest Corporate Backer Invests Another $500 Million As Crypto Prices Crash

, Bitcoin’s Biggest Corporate Backer Invests Another $500 Million As Crypto Prices Crash, The Nzuchi News Forbes

Topline

Two weeks after announcing a debt offering to fund the investment, business analytics firm MicroStrategy, which owns more bitcoin than any other corporation in the world, has spent nearly $500 million to acquire more of the world’s largest cryptocurrency—taking advantage of crashing prices Monday morning despite warning of a significant loss to come as a result of bitcoin’s tanking value. 

Key Facts

Virginia-based MicroStrategy announced Monday morning that it used approximately $489 million in cash raised last week to buy about 13,005 bitcoins at an average price of roughly $37,617.

With the new investment, MicroStrategy owns about 105,085 bitcoins, worth approximately $3.4 billion as prices tumble nearly 10% from a Sunday afternoon high.

Helmed by billionaire bitcoin bull Michael Saylor, the firm has so far spent more than $2.7 billion buying bitcoin at an average price of $26,080—about 15% below current prices of $32,000.

MicroStrategy shares plunged 7% in pre-market trading and are now down more than 49% from a mid-February high. 

Key Background

MicroStrategy’s bitcoin commitment has helped the company’s stock reverse a decades-long lull that started when the dot-com bubble crashed in March 2000. Despite at one point crashing more than 99% from its tech-bubble high in 2000, the stock has skyrocketed more than 300% since Saylor announced the company’s first bitcoin purchase in August. However, shares tend to ride bitcoin’s incredibly volatile price wave. In a filing last Monday, MicroStrategy said it expects to incur an impairment loss of at least $284.5 million in the second quarter “based on the fluctuations in the market price of bitcoin.” Now down nearly 80% from their dot-com era peak, shares have plunged more than 50% since February, when bitcoin sank after Tesla CEO Elon Musk said prices seemed “a little high.” The cryptocurrency is down about 40% over the same period, but like MicroStrategy, its prices are up more than 300% over the past year.

Surprising Fact

In a sign of massive interest from institutional investors, MicroStrategy reportedly received more than $1.5 billion in orders for the offering, which was announced two weeks ago while bitcoin prices were at a one-month low of about $33,400.

, Bitcoin’s Biggest Corporate Backer Invests Another $500 Million As Crypto Prices Crash, The Nzuchi News Forbes

TANGENT

MicroStrategy owns more bitcoin than any publicly traded company, but less than investment manager Grayscale, which owns 654,885 tokens in its namesake bitcoin fund—worth more than $24 billion.

FURTHER READING

Major Cryptocurrencies—Including Bitcoin, Ethereum, Dogecoin—Plummet As China Widens Crackdown (Forbes)

Bitcoin’s Biggest Corporate Investor Raises $500 Million To Buy More—Topping Expectations As Crypto Surges (Forbes)

Bitcoin’s Biggest Corporate Backer Expects $285 Million Loss After Crypto Crash—But Wants To Raise $400 Million In Debt To Buy More (Forbes)

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