MicroStrategy buys over $1 billion worth of bitcoin again

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Michael Saylor’s company, MicroStrategy, has once again made a massive bet on bitcoin.

In recent weeks, the company purchased 18,300 bitcoins for a total of $1.11 billion, at an average price of $60,408 per bitcoin.

Massive bitcoin holdings

With this acquisition, MicroStrategy’s total bitcoin holdings have reached 244,800. In total, the company has spent $9.45 billion on its bitcoin stash, with an average purchase price of $38,585 per bitcoin. At current market prices, the value of MicroStrategy’s bitcoin holdings is approximately $15 billion.

Continuous bitcoin accumulation

Despite the sideways movement of the bitcoin price in recent months, MicroStrategy continues to steadily accumulate more bitcoin. The company initially began converting its cash reserves into bitcoin as a hedge against the declining purchasing power of the U.S. dollar. Since then, MicroStrategy has expanded its strategy by issuing bonds and selling new shares to fund even more bitcoin purchases.

MicroStrategy as a bitcoin leverage play

MicroStrategy’s stock acts as a leverage on bitcoin, making it popular with investors who want to benefit from bitcoin’s rise without directly holding the cryptocurrency. For investors looking for less risk, spot bitcoin ETFs have also been available since this year.

Risks and opportunities

MicroStrategy carries significant debt, mainly in the form of convertible bonds, on which it pays a low interest rate. These bonds won’t mature for several years, and the company is betting that bitcoin’s price will rise significantly by that time. If that happens, bondholders may choose to convert their debt into shares, reducing MicroStrategy’s debt burden. However, if bitcoin’s price drops, this scenario could fail, leaving MicroStrategy vulnerable to financial trouble if it cannot meet its debt obligations.

Saylor’s strategy is high-risk, but so far it has led to success, making MicroStrategy the largest institutional holder of bitcoin.

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