MicroStrategy, a company that identifies as a Bitcoin development corporation, has announced another round of share issuance to purchase additional Bitcoin. The firm has now accumulated 450,000 BTC, with an unrealized profit of approximately $14.1 billion.
MicroStrategy Acquires More Bitcoin
Between January 6 and January 12, 2025, MicroStrategy purchased an additional 2,530 Bitcoin at an average price of around $95,972 per coin. The total amount spent was approximately $243 million.
As of January 12, 2025, MicroStrategy and its subsidiaries hold a total of 450,000 Bitcoin. The cumulative acquisition cost stands at about $28.2 billion, with an average purchase price of $62,691 per Bitcoin.
Unrealized Gains Reach $14.1 Billion
MicroStrategy uses a proprietary metric called "Bitcoin Yield" to measure the performance of its Bitcoin strategy. So far this year, the company has reported a Bitcoin Yield of 0.32%.
At a Bitcoin price of $94,000, the total value of MicroStrategy’s Bitcoin holdings is approximately $42.3 billion. This results in an unrealized gain of $14.1 billion. Despite this significant profit, the company’s market capitalization of $73.8 billion still reflects a premium of over 40%.
Funding Through Share Issuance
The latest Bitcoin acquisition was funded through the issuance of new shares. On October 30, 2024, MicroStrategy entered into a sales agreement with several agents, allowing the company to issue and sell Class A common stock worth up to $21 billion.
Between January 6 and January 12, 2025, the company sold 710,425 shares, raising net proceeds of approximately $243 million. As of January 12, around $6.53 billion worth of shares remain available for issuance under the same sales agreement.
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Frequently Asked Questions
What is MicroStrategy’s Bitcoin strategy?
MicroStrategy has adopted a corporate strategy of converting substantial portions of its treasury assets into Bitcoin. The company views Bitcoin as a reliable store of value and aims to maximize long-term shareholder value through its accumulation.
How does MicroStrategy fund its Bitcoin purchases?
The company primarily funds its Bitcoin acquisitions through the issuance of new shares and the use of excess cash flows. By raising capital via equity markets, MicroStrategy avoids leveraging debt while expanding its cryptocurrency holdings.
What is Bitcoin Yield?
Bitcoin Yield is a performance metric introduced by MicroStrategy to quantify the returns generated from its Bitcoin investments. It reflects the percentage gain or loss relative to the company’s total Bitcoin holdings over a specific period.
What are the risks of such a strategy?
The strategy is highly dependent on Bitcoin’s market performance. Significant price volatility could lead to substantial losses. Additionally, regulatory changes, market sentiment, and macroeconomic factors may adversely affect the value of the company’s holdings.
How does MicroStrategy’s stock performance relate to Bitcoin?
MicroStrategy’s stock has become highly correlated with Bitcoin’s price movements. Investors often treat it as a proxy for Bitcoin exposure within the traditional equity market, which can lead to heightened volatility in its share price.
Is MicroStrategy’s Bitcoin strategy sustainable long-term?
The long-term sustainability depends on continued confidence in Bitcoin’s value proposition, access to capital markets, and the ability to manage liquidity without compromising corporate operations.
Disclaimer: Cryptocurrency investments carry significant risk. Prices are highly volatile, and investors may lose their entire capital. Always conduct thorough research and consider your risk tolerance before investing.