This week’s drop in the price of bitcoin makes people wonder again if Michael Saylor will have to sell some or all of his company’s huge holdings at some point.
Michael Saylor, the Executive Chairman of MicroStrategy (MSTR) and a well-known bitcoin bull, told CNBC that he won’t change his plan to buy and hold bitcoin (BTC) even though the cryptocurrency’s price fell to new two-year lows this week.
Bitcoin prices fell below $16,000 on Thursday after the troubled cryptocurrency exchange FTX shut down. After a small bounce on Friday morning’s slow inflation report, the price is now just above $17,000.
Saylor said that bitcoin is 33% higher than when he first started buying it in 2020, and MicroStrategy’s stock is up 38% over the same time period, which is better than the major averages and popular tech mega-cap names like Apple (AAPL) and Amazon (AMZN).
He said, “Our shareholders are winning, and we’re going to keep doing what we’re doing because it’s working.”
After that first buy, MicroStrategy made many more large purchases of bitcoin, some of which were backed by large amounts of debt. It now has more than 129,000 coins that cost an average of more than $30,000 each to buy. With bitcoin at around $17,000, people are again wondering if MicroStrategy might be forced to sell, even though Saylor is still optimistic.
It was asked on the company’s first-quarter earnings call this year when bitcoin was worth about $30,000. Then-outgoing CFO Phong Le said a price at or below $21,000 could be a trigger for a margin call. Saylor was quick to explain what he meant by what he said. He took to Twitter to spell out exactly what MicroStrategy has to do with its bitcoin-backed loans.
He wrote, “MicroStrategy has a term loan for $205 million and needs to keep $410 million as collateral.” He also said that the company had more than 115,000 unencumbered bitcoin, which at the time were worth about $3 billion and are worth about $2 billion today. The company could use this bitcoin to make a pledge if it needed to. He did say that if the price fell below $3,562, the company would run out of bitcoin to use as collateral, but that they could still post other assets.
Saylor said today, “We’re excited about Bitcoin because it’s something bigger than all of us.” “We’re actually buying into a set of rules that are being used to solve problems all over the world.”
