How Much Bitcoin Does Microstrategy (MSTR) Own?

According to Microstrategy’s Q1 2024 report, as of April 26, 2024, Microstrategy owned 214,400 bitcoins. Its total investment in Bitcoin is $7.54 billion, with an average cost basis of $35,180 per Bitcoin. This is 1.08% of all bitcoins in existence.

As of August 1st, 2024, Microstrategy’s bitcoins are worth $14,479,093,433.

Under Michael Saylor, Microstrategy has been a major institutional holder since starting its Bitcoin strategy in August 2020.

To understand how Microstrategy accumulated so many bitcoins, let’s look at their bitcoin acquisition timeline and the details of their major purchases.

Microstrategy’s Bitcoin Acquisition Timeline

Microstrategy started its bitcoin strategy in August 2020. Here’s a chronological timeline of their major purchases and milestones:

This shows Microstrategy’s consistent and aggressive buying over nearly four years. They started big in August 2020 and have been adding to their position ever since, often buying big during market dips. Despite market volatility, Microstrategy has stuck to its long-term view of Bitcoin as a store of value and inflation hedge.

Microstrategy’s Bitcoin Strategy

Having looked at Microstrategy’s Bitcoin acquisition timeline, which shows consistent and aggressive buying over nearly four years, let’s now understand the thinking behind these big purchases and what they mean for the company. Microstrategy’s move to convert a big chunk of its treasury into Bitcoin is a game changer in corporate finance. Let’s dive into the reasoning and implications.

Why the Company is Buying Bitcoin

1. Inflation Hedge: Microstrategy’s CEO, Michael Saylor, has repeatedly said that Bitcoin is an inflation hedge. The company views Bitcoin as a better store of value than cash in an environment of monetary expansion.
2. Maximize Long-Term Shareholder Value: By converting a large chunk of their cash into bitcoin, Microstrategy is betting on bitcoin’s price appreciation to increase shareholder value over time.
3. First Mover Advantage: Microstrategy is a leader in corporate crypto adoption, as it was one of the first publicly traded companies to use Bitcoin as a primary treasury reserve asset.
4. Asset Diversification: Bitcoin is a way to diversify the company’s assets beyond its core business intelligence business.
5. Technological Alignment: As a tech company, Microstrategy sees alignment between its business intelligence approach and Bitcoin and blockchain’s revolutionary potential.

Implications for the Company

1. Financial Statement Volatility: Because of accounting rules, Microstrategy must report Bitcoin as an intangible asset and record impairment losses when its price drops. This has caused significant volatility in their reported financials.
2. Increased Visibility: Microstrategy’s bitcoin strategy has attracted considerable attention from investors, analysts, and the media beyond its traditional business intelligence market.
3. Stock Price Correlation: The company’s stock price is now highly correlated with bitcoin’s price, potentially overshadowing their core business performance.
4. Debt Financing: Microstrategy(MSTR) has taken on a lot of debt, including convertible notes and secured loans, to fund some of its Bitcoin purchases. This has increased its leverage and risk.
5. Big Gains: As of August 1st, 2024, Microstrategy’s bitcoin holdings were worth around $14.48 billion, nearly double their original investment of $7.54 billion, so there’s big potential.
6. Regulatory Scrutiny: Microstrategy’s bitcoin strategy has attracted regulatory attention, so it may be subject to more compliance and risk.
7. Opportunity Cost: By investing a large portion of its capital in Bitcoin, Microstrategy may have limited its ability to invest in its core business or other opportunities.

Microstrategy’s bitcoin strategy is a bold and unusual approach to corporate treasury management. While it has big potential, it comes with big risks from bitcoin’s price volatility and regulatory uncertainty. The strategy has fundamentally changed Microstrategy’s financial profile and market perception, making them as much a Bitcoin investment vehicle as a business intelligence company.

Compared to Other Corporate Bitcoin Holders

Microstrategy’s Bitcoin holdings dwarf those of other public companies. With 226,331 BTC worth over $14.5 billion, Microstrategy has over 11 times the amount of bitcoin as their nearest corporate competitor. This is 1.078% of the total Bitcoin supply, making Microstrategy the only public company to break 1%.

There is a big gap compared to the other major corporate bitcoin holders. Marathon Digital Holdings Inc., the second largest holder, has 20,000 BTC worth around $1.28 billion. Then there’s Tesla, Inc. with 9,720 BTC, Hut 8 Corp with 9,109 BTC, and Riot Platforms, Inc. with 9,084 BTC. Even if we add up the next four largest corporate bitcoin holders after Microstrategy, they still don’t come close to Microstrategy’s total.

This highlights the scope of Microstrategy’s bitcoin strategy and its unique position in the corporate world. While other companies have dabbled in bitcoin investment, Microstrategy has changed its business model and financial structure.

Future Plans

Looking forward, Microstrategy shows no signs of changing its bitcoin strategy. CEO Michael Saylor has repeatedly said they will continue to buy and hold Bitcoin as part of their corporate strategy. They will do this opportunistically using cash flows from their software business, equity or debt financing, or selling their stock.

But this strategy puts Microstrategy’s financials at the mercy of Bitcoin. There will be significant gains in Bitcoin and Microstrategy’s balance sheet and stock. Significant declines in Bitcoin and Microstrategy will take impairment charges and hurt their financials and stock. Their debt related to Bitcoin purchases will become more challenging to manage if Bitcoin goes into a prolonged downturn.

Conclusion

Microstrategy’s Bitcoin journey started in August 2020. In nearly four years, they have been buying Bitcoin consistently and have more than 11 times as much as their nearest corporate competitor. They have fundamentally changed from a business intelligence company to a de facto bitcoin investment vehicle, as well as their financials and market perception.

Microstrategy’s position in the crypto market can’t be overstated. With over 1% of the total bitcoin supply, their aggressive buying has helped legitimize bitcoin as a corporate treasury asset. Microstrategy’s moves often move the market, bringing institutional interest in Bitcoin. Their big holdings and buying will impact Bitcoin’s price and market dynamics.

In summary, Microstrategy(MSTR) has become the pioneer in corporate crypto adoption. While this comes with big risks, it’s also brought big returns and made them a big player in the financial world. Investors, analysts, and the broader financial community will watch Microstrategy’s journey as the crypto market evolves, influencing corporate attitudes toward digital assets. Despite market volatility and skepticism, their commitment to their Bitcoin strategy has set a new precedent in corporate finance and will be studied for years.

Resources:

• https://assets.contentstack.io/v3/assets/bltb564490bc5201f31/blt08df5350e9b7445d/662ffa5d81c88450bb38297d/microstrategy-q1-2024-earnings-presentation.pdf
• https://finance.yahoo.com/news/does-microstrategy-now-own-1-140012540.html
• https://x.com/__SayI0r