By
Godfrey Benjamin
May 10th, 2024
Microstrategy has now realised more than $2 billion in profits directly from its repeated investments in Bitcoin.
Business intelligence company MicroStrategy Inc (NASDAQ: MSTR) has seen a staggering surge in gains, amassing over $2 billion in profit from its substantial Bitcoin (BTC) holdings. This comes following the cryptocurrency’s recent surge above $42,000.
MicroStrategy started its Bitcoin investment journey in August 2020. Since then, the company has continuously increased its Bitcoin holdings, with the most recent acquisition of 16,130 BTC in November. As of November 30, MicroStrategy had an impressive 174,530 Bitcoins, acquired at an average price of $30,252 each. This amounts to a total investment of $5.28 billion.
Bitcoin’s rise to $42,000 earlier on Monday propelled MSTR’s total holdings to an astonishing $7.3 billion. This surge put MSTR’s profits at a remarkable value of over $2 billion. However, Bitcoin’s price has now retraced to $41,755.49. Nonetheless, the surge marks Bitcoin’s highest valuation since April 2022, when it plummeted under $16,000, which placed MicroStrategy’s investment in extreme uncertainty. Despite the volatility, Chairman Michael Saylor remained resolute in expanding the company’s Bitcoin reserves, funding purchases through several means, including equity issuance.
Microstrategy’s Bitcoin Profit-Making Strategy
Regardless of Bitcoin’s volatile market performance, MicroStrategy has steadfastly adhered to its ‘HODLing’ strategy, refraining from selling any of its Bitcoin holdings except for a minor sale in late December for tax purposes, promptly repurchasing the assets. On many occasions, Saylor has shown his conviction in holding onto Bitcoin long-term rather than trading based on market fluctuations.
MicroStrategy’s Q3 financials underscore the company’s commitment to “acquire and hold Bitcoin”, viewing it as a secure store of value supported by a robust, open-source architecture. The company’s current approach to accumulating more Bitcoin revolves around stock issuance, through which it raised $600 million to purchase the 16,130 BTC.
Saylor’s personal Bitcoin holdings, disclosed in 2020, revealed ownership of 17,732 BTC, acquired at an average price of $9,882 per coin. Assuming he retained all the coins, this investment has surged by an astounding 320%. Considering his personal and corporate stakes, Saylor now commands nearly 1% of all circulating Bitcoins, consolidating his position as an important figure in the crypto landscape.
Notable Companies Profiting from Strategic Bitcoin Investments
MicroStrategy is one of many corporations successfully integrating Bitcoin into its investment strategy. In February 2021, Tesla revealed a $1.5 billion investment in Bitcoin, recording significant gains as the cryptocurrency surged. In the same year, Wedbush Securities analyst Daniel Ives said that Tesla made $1 billion in paper profits from its Bitcoin investment.
Additionally, Block Inc., helmed by CEO Jack Dorsey, also made significant Bitcoin investments. The company had an initial investment of $50 million in October 2020 and added $170 million in February 2021.
Marathon Digital Holdings also capitalized on the soaring Bitcoin prices, witnessing a remarkable 670% surge in revenue and achieving a profitable quarter with $64.1 million in net income. This financial success was due to a five-fold increase in Bitcoin production, rising from 6.7 BTC per day in Q3 2022 to an impressive 37.9 BTC per day in Q3 2023.