MicroStrategy Buys Another 1,045 bitcoins for $29.3m

[pawel7777]

As in topic's subject: MicroStrategy Buys Another 1,045 bitcoins for $29.3m:

https://www.coindesk.com/business/2023/04/05/microstrategy-buys-another-1045-bitcoin-for-239m/

^ in the article there's a typo, they've spent $29.3m not $23.9m.

https://twitter.com/saylor/status/1643586872839471105?t=L7IzW6T8ltWlRp-9pB3Oow&s=19

How does it make you feel that the company that is not doing very in terms of operating profitability is further increasing its exposure to Bitcoin, and now sits at 140,000 bitcoins. I'm a little uncortable with a thought that if things go further south for them, they might be forced to dump it all on the market.

[Charles-Tim]

Microstrategy bought more bitcoin

I'm a little uncortable with a thought that if things go further south for them, they might be forced to dump it all on the market.

Can it go south to the recent lowest price of bitcoin during last year ending? Bitcoin was at $15500 or so at the time. Yet, Microstrategy survived.

[adaseb]

They are pretty much at break even after those huge buys at $50K plus range. I remember when he first announced he bought Bitcoin at $10K. His average before the huge bull market was like $11111 eventually but those huge buys really messed up his average cost.

He does DCA but not with similar amounts. He bought more at a higher price and less at a lower price. Either way looks like next month he’ll be at break even or so. I remember his stock went crazy during the bull market.

[Zaguru12]

How does it make you feel that the company that is not doing very in terms of operating profitability is further increasing its exposure to Bitcoin, and now sits at 140,000 bitcoins. I'm a little uncortable with a thought that if things go further south for them, they might be forced to dump it all on the market.

I doubt they will dump it, considering how hard they hold on to it even after last years bearish method. Had they have that intention and could panic then they could have sold it just at the 20k mark after accumulating it. Now they have an average price of $29,803 to each bitcoin which I see is a very good price considering where the current price is right now pre halving period. I just don’t understand why they actually buy Few in the DIP or is this another DCA method that could work potentially.

[Davidvictorson]

I'm a little uncortable with a thought that if things go further south for them, they might be forced to dump it all on the market.

If you have followed the history of MicroStrategy you would have noticed that it is their vision, firm belief and not the price of bitcoin that drives them each time they buy more bitcoins. Even when the price of bitcoin was dropping and the public thought that they would sell off their bitcoins, they didn't. I think one they have a visionary leader who during the bear market assured investors that they weren't dumping bitcoin and secondly, their shareholders isn't mounting any pressure on them to sell.

[Ayers]

How does it make you feel that the company that is not doing very in terms of operating profitability is further increasing its exposure to Bitcoin, and now sits at 140,000 bitcoins. I'm a little uncortable with a thought that if things go further south for them, they might be forced to dump it all on the market.

... I just don’t understand why they actually buy Few in the DIP or is this another DCA method that could work potentially.

I think they were like us, when bitcoin plummeted but they didn't have the money to invest. Despite being a large business, it is not always possible to have the money to invest in bitcoin, especially when the economic situation is crushing large corporations in the world. They hold a huge amount of bitcoin, and many people fear that they will dump it, but I would be very excited if they did. I don't know what the reason is, but as long as bitcoin is cheap, I think it's an opportunity to seize, not panic. Because no matter what they do, bitcoin will always bounce back.

[hugeblack]

It is better that all news related to MicroStrategy be updated here -----> MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’

They have been making continuous purchases for the past two years and creating a separate topic for each purchase will reduce the quality of posts.

Their average purchase of Bitcoin is still $29,000, although they bought a lot when the price was less than20k, which means that their short-term strategy is not profitable, or at least it is not a green signal for anyone who wants to predict the price or buy.

[OgNasty]

Microstrategy is no doubt responsible for Bitcoin’s continued strength with all their buying support. However, I’ve been saying for a while now that it makes me uncomfortable with how much BTC they have. It sort of goes against what Bitcoin is about to have so many coins centralized in one entity.  At some point Microstrategy will be doing more harm than good and I think we’re nearing that point.

[salad daging]

It is better that all news related to MicroStrategy be updated here -----> MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’
They have been making continuous purchases for the past two years and creating a separate topic for each purchase will reduce the quality of posts.

Well, better head over to the board @fillippone made about MicroStrategy that talks about it there even @fillippone has spreadsheet notes for every purchase they make.

It's a lot of separate threads regarding buying MicroStrategy so it's going to be very conflicting.

Their average purchase of Bitcoin is still $29,000, although they bought a lot when the price was less than20k, which means that their short-term strategy is not profitable, or at least it is not a green signal for anyone who wants to predict the price or buy.

Their buying journey from 2020 until now is still continuing: https://buybitcoinworldwide.com/microstrategy-statistics/

At least MicroStrategy will not sell for the short term, obviously they are more serious for the long term. See what has been done recently, this indicates that this institution will continue to accumulate much more.

But their sales target is still a mystery.

[mk4]

It sort of goes against what Bitcoin is about to have so many coins centralized in one entity.  At some point Microstrategy will be doing more harm than good and I think we’re nearing that point.

It's definitely not preferable, but that's simply how free markets work — larger entities will be able to stock up on far more bitcoin simply because of the capital advantage.

But in the end — regardless what they'll end up doing to their BTC, it is what it is. Anyone is free to purchase and dump bitcoin as much as they want.

[el kaka22]

These guys are really a crypto company in reality, maybe they act as if something else but they are really a crypto company. They don't even need to do anything else right now, they can just sell everything else and buy bitcoin with it and just hold bitcoin, that would be good enough.

When the bitcoin price goes up, the valuation of the company would go up, and the stock holders share value would go up as well. That type of company doesn't exists right now as far as I know, and they can be the first one. Considering bulk of their money is in bitcoin right now, they are not really that far away from this to become reality anyway, it's quite realistic and could happen.

[adaseb]

Microstrategy is no doubt responsible for Bitcoin’s continued strength with all their buying support. However, I’ve been saying for a while now that it makes me uncomfortable with how much BTC they have. It sort of goes against what Bitcoin is about to have so many coins centralized in one entity.  At some point Microstrategy will be doing more harm than good and I think we’re nearing that point.

Yes this is going to be an issue. Say we start to rally to $40-60K or so. And what is going to happen if MSTR earnings are released and it shows that they sold a bunch of Bitcoins. What will happen to bitcoins price then? I'll be similar to Tesla when they started to sell their bitcoin holdings.

People will think they are going to dump billions on the market and they will start to sell their bitcoins before MSTR starts to take profits. Right now we dont have to worry because he is at break-even pretty much. Make no sense for him to sell at $30K, however I can see him taking profit this time at $50K if we get there in the near future.

[pawel7777]

Microstrategy bought more bitcoin

I'm a little uncortable with a thought that if things go further south for them, they might be forced to dump it all on the market.

Can it go south to the recent lowest price of bitcoin during last year ending? Bitcoin was at $15500 or so at the time. Yet, Microstrategy survived.

I wasn't talking about the BTC price that would force them to sell, but about Microstrategy's poor performance. Let's not forget their not some fund that just holds bitcoins but an actual business offering services, that also happens to hold bitcoins.

If they keep making huge losses, then it's inevitable that they will be forced to sell eventually. And their recent results do not spark optimism:



Note - the results are presented in thousands, meaning they recorded a net loss of $1.5bn for the year ended 31 Dec 2022.

[thecodebear]

Notice in those financials that there is a line for digital asset impairment. Because the rules for holding cryptocurrencies on the balance sheet had not yet been established so a company is forced to actually include paper losses from cryptocurrencies as real losses on their financials.

So of the $1.469 billion "loss" they took that year, $1.286 billion of that was bitcoin paper losses. Which means the company actually took a $183 million loss for the year, not $1.469 billion.

Still, not great they took a loss for the year of course, but they aren't losing anywhere near as much as the financial numbers make it sound like.


Notice they made about $300 million the previous year when you account for the bitcoin impairment "loss".

In 2022 you can see their revenue went down slightly, their cost of revenue went up slightly and their operating expenses went up slightly. None of that is too bad. Their interest expense doubled which presumably is from paying interest on loans for bitcoin, remember they just paid off their Silvergate loan so this year their interest expenses should go down significantly.

The main difference is the line called "Provision for (benefit from) income taxes". I have no clue what that is but that went from helping them by $275 million in 2021 to hurting them by $147 million in 2022. That's the main difference between the years right there, though I don't know what that is. If you exclude that they made $20 million in 2021 and and lost $36 million in 2022. But since I don't know what the "Provision for income taxes" is I have no clue why that changed or if that will continue to be a problem in the future or not.

[STT]

DCA is one thing but if he ever has to sell then he should choose to do so on higher prices and buy on lower prices.  It seems BTC is best suited to unleveraged users but I dont think he does use the BTC and is his business really described as unleveraged.  Just seems worrying he only ever buys when a normal operation cant just do only a buy and call it a strategy, personal users sure thats fine so long as the cash is spare to them that can be ok but not a business imo.

however I can see him taking profit this time at $50K if we get there in the near future.

That can be true of the market in general, people will take profits at 50k or whatever level.   Thats why I imagine its at least this whole year to further consolidate and build, not too bullish while retracking prior pricing.

[Wind_FURY]

As in topic's subject: MicroStrategy Buys Another 1,045 bitcoins for $29.3m:

https://www.coindesk.com/business/2023/04/05/microstrategy-buys-another-1045-bitcoin-for-239m/

^ in the article there's a typo, they've spent $29.3m not $23.9m.

https://twitter.com/saylor/status/1643586872839471105?t=L7IzW6T8ltWlRp-9pB3Oow&s=19

How does it make you feel that the company that is not doing very in terms of operating profitability is further increasing its exposure to Bitcoin, and now sits at 140,000 bitcoins. I'm a little uncortable with a thought that if things go further south for them, they might be forced to dump it all on the market.

Be like Giga-Chad-Saylor. No charts, no research, no leverage, no strategy, no shitcoins, only Bitcoin and bids whenever he believes it's the right time, then becomes one of the largest HODLers of Bitcoin.

 

His results during the next bull cycle? Priceless.

[dragonvslinux]

Microstrategy is no doubt responsible for Bitcoin’s continued strength with all their buying support. However, I’ve been saying for a while now that it makes me uncomfortable with how much BTC they have. It sort of goes against what Bitcoin is about to have so many coins centralized in one entity.  At some point Microstrategy will be doing more harm than good and I think we’re nearing that point.

Yes this is going to be an issue. Say we start to rally to $40-60K or so. And what is going to happen if MSTR earnings are released and it shows that they sold a bunch of Bitcoins. What will happen to bitcoins price then? I'll be similar to Tesla when they started to sell their bitcoin holdings.

People will think they are going to dump billions on the market and they will start to sell their bitcoins before MSTR starts to take profits. Right now we dont have to worry because he is at break-even pretty much. Make no sense for him to sell at $30K, however I can see him taking profit this time at $50K if we get there in the near future.

Personally I don't see this as a concern, based on Saylor's belief and purpose in holding Bitcoin. It's purely as a reserve asset, better than cash reserves, as opposed to speculating on turning a profit. Ultimately he's aware that his stock won't be able to outperform Bitcoin long-term, only keep up with price at best, and by holding Bitcoin reserves as opposed to cash MSTR stock does much better.

Pople forget that MSTR stock was basically a shitcoin until they started buying Bitcoin (down 95% from ATH after 20 years). So if they were to start selling, it'd likely return to it's shitcoin status. The only reason I can see them selling is if they need to access their reserves due to liquidity issues with Microstrategy - as ultimately that's the purpose of having these reserves, in order to act as a back up.

So in summary the only issue with MSTR holding so much Bitcoin is if they go bankrupt and go into liquidation, then the BTC reserves would be dumped. That's the real risk here, which is probably quite low.

[OgNasty]

Microstrategy has become a way for funds to get exposure to Bitcoin without having to hold it themselves, declare that they’re holding Bitcoin, or create new divisions of their company to handle crypto. They just have to add Microstrategy to their portfolios, and they are. I wonder if a spot ETF would have the major holders sell and buy the ETF instead.

[pawel7777]

Notice in those financials that there is a line for digital asset impairment. Because the rules for holding cryptocurrencies on the balance sheet had not yet been established so a company is forced to actually include paper losses from cryptocurrencies as real losses on their financials.

So of the $1.469 billion "loss" they took that year, $1.286 billion of that was bitcoin paper losses. Which means the company actually took a $183 million loss for the year, not $1.469 billion.

Still, not great they took a loss for the year of course, but they aren't losing anywhere near as much as the financial numbers make it sound like.


Notice they made about $300 million the previous year when you account for the bitcoin impairment "loss".

In 2022 you can see their revenue went down slightly, their cost of revenue went up slightly and their operating expenses went up slightly. None of that is too bad. Their interest expense doubled which presumably is from paying interest on loans for bitcoin, remember they just paid off their Silvergate loan so this year their interest expenses should go down significantly.

The main difference is the line called "Provision for (benefit from) income taxes". I have no clue what that is but that went from helping them by $275 million in 2021 to hurting them by $147 million in 2022. That's the main difference between the years right there, though I don't know what that is. If you exclude that they made $20 million in 2021 and and lost $36 million in 2022. But since I don't know what the "Provision for income taxes" is I have no clue why that changed or if that will continue to be a problem in the future or not.

I'm not quite sure why is the Bitcoin holding impairment loss included in the operating results, unless crypto-investing is considered a part of their normal business operations. But that loss is very real - they bought in higher than the current price, so the value is lost and they have less money than they had before. There are no accounting rules that would allow keeping such loss off the records.

And if you propose that BTC impairment loss should be ignored - then, consistently we should ignore the btc asset in the balance sheet, which would increase the Total stockholders’ deficit from ~$383 millions to ~$2.2 billions, making their shares worth less than a toilet paper.

I guess your point was that they could keep going even when bitcoin keeps dropping, but I don't think that's the case. That would only be true if they bought bitcoins with some excess cash that they didn't really need, but currently their total liabilities exceed their total assets by $383m and that's including their $1.8b btc holdings (at 31 Dec 2022).

Link to press release with complete quarterly and annual figures:
https://www.microstrategy.com/content/dam/website-assets/collateral/financial-documents/press-release-archive/microstrategy-announces-fourth-quarter-2022-financial-results_02-02-2023.pdf

ps. "Provision for (benefit from) income taxes" is just a funny wording for "tax charge/(credit)". It simply represent corporation tax (+ deferred tax), and as it includes multiple elements (i.e. tax losses carried forward, tax reliefs etc) it sometimes can result in credit for the year rather than charge.

[pawel7777]

Microstrategy has become a way for funds to get exposure to Bitcoin without having to hold it themselves, declare that they’re holding Bitcoin, or create new divisions of their company to handle crypto. They just have to add Microstrategy to their portfolios, and they are. I wonder if a spot ETF would have the major holders sell and buy the ETF instead.

How would creating crypto-division make any difference though? When you buy MSTR stock, you're buying shares of the entire group. And that would be a very unattractive way of investing in Bitcoin, since their stock price is also largely dependent on the performance of their principal activities.