Michael Saylor, the chief executive officer of business analytics company MicroStrategy, has dismissed rumours that the company’s Bitcoin is about to be liquidated. Saylor claimed after the firm acquired more bitcoins, it was well-positioned to weather the continuing storm and would continue acquiring other coins.
MSTR obtained a three-year, $204.7 million loan from crypto-focused SilverGate bank to finance its Bitcoin acquisitions in March. The loan was secured by around $820 million in Bitcoin, representing approximately 12% of MSTR’s assets. Saylor refuted claims that the company might soon be liquidated for less than $21,000 due to Bitcoin’s prolonged price decline.
Crypto-focused SilverGate bank. Image: arcpublishing
“When bitcoin was cut in half, we are still 10x over collateralised against that,” Saylor told Christopher Jaszczynski, creator of popular youtube crypto channel MMCrypto. “So in essence this is like having a million dollars of collateral and borrowing $40,000 right against it.”
According to Saylor, shareholders would only begin to worry about the company’s financial stability if Bitcoin fell below 95%. Saylor continued, “If bitcoin goes down by about 95%, then we would have to pledge some additional collateral.” He added, “We also have other cash flows and assets…so we were prepared for the worst case. So if you do the math against our bitcoin position, when bitcoin gets to $3500 or so, we have to come up with some other collateral if it keeps going lower.”
Saylor then defended the corporation’s dollar-cost averaging method for accumulating BTC, stressing that the company was in it for the long haul. “Our strategy is simple, we acquire bitcoin, we hold bitcoin, we don’t sell bitcoin…we just happen to believe that 100 years from now, bitcoin is like manhattan and you just gonna wanna hold as many blocks of bitcoin as you can.” He also stated that the only two errors they could make would be to purchase Bitcoin with so much leverage that they are forced-liquidated during a drawdown or cease Bitcoin.
As for the continuing crypto crash, the crypto millionaire urged investors to continue HODLing, noting that “if you are going to arrive early to a revolutionary technology and the first digital commodity that’s monetised in the history of the world”, then bumpy rides were part of the game.
MicroStrategy acquired 480 BTC on Thursday, raising its total holdings to 129,699 BTC. At the time of publication, BTC is trading at $19,262, valuing the stockpile at $2.5 billion.