MicroStrategy added $150 million worth of bitcoin to its stash at an average price per coin of $23,238 in February and March, generating an 18% gain over the past few weeks. The Tysons Corner, Virginia-based company sold equity to pay for the crypto and also to extinguish debt to Silvergate Bank.
The business-software maker and bitcoin investor also freed up 34,619 bitcoins (BTC) of collateral used to back a $161 million term loan, according to a filing with the U.S. Securities and Exchange Commission, by repaying Silvergate, the crypto-focused bank based in La Jolla, California that is winding up its business after a run on deposits. The floating-rate loan was scheduled to mature in March 2025 and bore interest at a rate of 8.27% a year as of Friday, when the payoff was executed.
The most recent purchases of 6,455 bitcoins brought MicroStrategy’s holdings to about 138,955 BTC, worth $4.14 billion and acquired at an average price of roughly $29,817 each. Bitcoin
Silvergate’s closing announced March 9, and subsequent runs on Silicon Valley Bank and Signature Bank initially depressed cryptocurrencies but then gave them a boost —especially bitcoin—as the U.S. government guaranteed depositors would be repaid and investors apparently felt the Federal Reserve’s campaign to raise interest rates would be limited by concerns of weakness at other banks.
That could benefit bitcoin in two ways from a dollar-based perspective: The rising interest rates were making traditional money-market investments more attractive than direct holdings in crytpo, and a curtailed tightening cycle could leave inflationary pressures in the economy, a positive for holders of the original cryptocurrency.
MicroStrategy has been a long-term bitcoin bull under co-founder and former CEO Michael Saylor. In August, he gave up management of the company’s business-analytics division to concentrate on bitcoin strategy as executive chairman. At the time, the company’s bitcoin holdings amounted to $1.9 billion.
In September, MicroStrategy entered into an agreement with Cowen and BTIG to sell up to $500 million of its equity to the two firms at prevailing market prices, less a 2% commission. The filing on Monday revealed MicroStrategy raised $339.4 million from such sales between January 1 and March 24, issuing 1.3 million shares.
That works out to about $252 a share and represents about 12% of the outstanding 11.3 million shares of class A and B stock that the company reported for the end of last year. The class A shares traded at $232.22 at noon on Monday, down 9.5% for the day, possibly because of the dilution.