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MicroStrategy Is Looking to Buy More Bitcoin, President Says

Danny Nelson
·3 min read

MicroStrategy is looking to add to its $521 million stash of bitcoin, the company’s president said Tuesday during the business intelligence firm’s earnings conference call.

MicroStrategy bought $250 million in bitcoin (BTC) on Aug. 11. It purchased an additional $175 million in bitcoin one month after that. Bitcointreasuries.org says the business intelligence firm now holds 38,250 BTC, or 0.182% of bitcoin’s total supply. 

With the recent rise in BTC’s price, its holdings are now worth $521 million, a 22% premium over the $425 million investment. 

Related: 'Garbage' Market Data Is Holding Bitcoin Back: MicroStrategy CEO

Now it wants more.

“You should expect that we will purchase additional bitcoin as we generate cash beyond what we need to run the business on a day to day basis,” MicroStrategy President Phong Li said.

Read more: MicroStrategy Buys $175M More in Bitcoin, Upping BTC Holdings to $425M

Li made the comments shortly after the company reported Q3 revenue rose 6.4% year-over-year and notched a net loss of $14.2 million. On a non-GAAP basis, the company posted a profit of $19.8 million, or $2.06 per share, up from $11.6 million, or $1.13 a year ago.

Related: JPMorgan Calls Square's $50M Bitcoin Investment 'Strong Vote of Confidence' for the Cryptocurrency

Besides the 22% return on its BTC investment, the company has seen another benefit from its foray into cryptocurrency – increased visibility.

“We’ve seen a notable and unexpected benefit from our investment in bitcoin in elevating the profile of the company in the broader market, Li said. “This is benefitting our reputation overall, raising our mindshare among prospective customers.”

CEO Michael Saylor, who has vocally championed BTC since early September, further explained during the earnings call that MicroStrategy’s bitcoin reserves are paying dividends across recruiting, marketing and the MicroStrategy brand. He also compared the bitcoin network to “a digital monetary network that doesn’t bleed monetary energy.”

“As more entities start to understand that idea, which is pretty compelling, the adoption of bitcoin increases,” he said.

The executive’s statement caps a wild three months at the business intelligence firm; executives first hinted at a bitcoin future in the firm’s Q2 call. MicroStrategy’s share has risen over 40% since Saylor’s first bitcoin disclosure on Aug. 11.

Share price aside, the bitcoin storyline has definitely boosted the company’s profile. The shift began on July 28, when during the Q2 earnings call executives mulled allocating $250 million into “alternative assets” over the next 12 months as a hedge against the weakening dollar. 

Bitcoin, they said, was one of the possible “alternatives.” It turned out to be the only alternative. 

All this from a company whose business model has nothing to do with crypto. Before bitcoin, MicroStrategy’s only interaction with the blockchain space was its $30 million sale of the Voice.com domain name to EOS in 2019. 

Read more: MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’

Saylor nevertheless framed the bitcoin holdings as an “example of MicroStrategy’s embrace of virtual technologies” in his Q3 earnings call preview.

With BTC now recognized as MicroStrategy’s “primary treasury reserve asset,” the firm said in its statement it could raise or lower its total holdings as necessary.

But from Li’s comments and from what BTC has done for the company’s visibility and its finances, it looks like the firm’s preference right now is to boost its holdings, and soon.

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