Software Company Spends $500 Million On Bitcoin

MicroStrategy — a business-to-business software company with a market cap of $6 billion — spent nearly half a billion dollars during its most recent Bitcoin purchasing spree.

The firm announced on Monday that it acquired 13,005 Bitcoins for an average price of $27,617 — a $489 million purchase. 

“As of 6/21/21 we #hodl ~105,085 bitcoins acquired for ~$2.741 billion at an average price of ~$26,080 per bitcoin,” said founder Michael Saylor on Twitter. The hashtag “hodl” — popular with cryptocurrency enthusiasts — is commonly translated as “hold on for dear life.”

MicroStrategy has purchased an additional 13,005 bitcoins for ~$489 million in cash at an average price of ~$37,617 per bitcoin. As of 6/21/21 we #hodl ~105,085 bitcoins acquired for ~$2.741 billion at an average price of ~$26,080 per bitcoin. $MSTRhttps://t.co/gLfnOxZEZc

— Michael Saylor (@michael_saylor) June 21, 2021

Several news outlets reported that MicroStrategy’s stock price dropped by 9% after the Chinese Communist Party announced more crackdowns on the cryptocurrency. Saylor was undeterred: “In the last twelve months, #Bitcoin has arrived on Wall Street. That is the news. The rest is noise.”

During an interview with CNBC last week, Saylor defended his firm’s decision to take out debt in order to acquire Bitcoin.

“We rotated our shareholder base and transformed ourselves into a company that’s able to sell enterprise software and to acquire and hold bitcoin, and we’ve done it successfully with leverage,” Saylor said. “That has increased the power of the brand by a factor of 100. We just had our best software quarter … in the last 10 years last quarter… The bitcoin business is driving shareholder returns. I think the employees are happy. The shareholders are happy.”

As Saylor referenced, Bitcoin — a cryptocurrency that exists only online and transmits via blockchain technology — is indeed growing in popularity and legitimacy. 

Companies such as PayPal, Tesla, and Morgan Stanley have experimented with buying Bitcoin and encouraging its use on their platforms. Leading investment groups — such as the directors of Harvard University’s endowment and Singapore’s sovereign wealth fund — have also purchased the digital currency.

Most recently, El Salvador’s government became the first to adopt Bitcoin as legal tender. Citizens will be able to utilize both Bitcoin and the United States dollar in transactions.

In early June, Salvadoran President Nayib Bukele announced that the small Central American nation would not charge capital gains taxes on Bitcoin and offer “immediate permanent residence for crypto entrepreneurs.” 

As one of the few small nations to use the dollar instead of its own currency, El Salvador’s bill to recognize Bitcoin cited the desire to avoid risk from government-controlled currencies.

“Central banks are increasingly taking actions that may cause harm to the economic stability of El Salvador,” reads the bill. “In order to mitigate the negative impact from central banks, it becomes necessary to authorize the circulation of a digital currency with a supply that cannot be controlled by any central bank and is only altered in accord with objective and calculable criteria.”

The Federal Reserve — the central bank of the United States — is embarking on an aggressive quantitative easing campaign following COVID-19 and the lockdown-induced recession. The inflation rate for the dollar recently reached its highest level since the Great Recession. 

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