MicroStrategy buys more than $1 billion worth of bitcoin, adding to massive holdings
- MicroStrategy announced it has bought just over $1 billion worth of bitcoin.
- The purchase of 19,452 bitcoins puts the company’s total holdings of the digital token at 90,531.
- MicroStrategy said the average purchase price of all its bitcoin purchases is $23,985 per digital token
- Don't forget look tips and tricks at last
MicroStrategy announced Wednesday it bought just over $1 billion worth of additional bitcoin, just days after finalizing another sale of convertible debt.
The Virginia-based enterprise software company said it paid an average price of $52,765 per bitcoin, including fees and other expenses. Its acquisition of approximately 19,452 bitcoins puts MicroStrategy’s total holdings of the digital token at 90,531.
MicroStrategy revealed its first bitcoin purchase in August, using existing cash on its balance sheet to acquire the cryptocurrency. It has since completed two convertible debt offerings to raise capital to finance additional purchases. The most recent offering was completed last week, generating roughly $1.03 billion in net proceeds; the notes bear a 0% coupon rate.
The news of MicroStrategy’s purchase comes as the price of bitcoin surged back over $50,000 Wednesday, although it later dipped below that level. The move higher follows news Tuesday night from Square, which said it bought $170 million worth of the cryptocurrency.
MicroStrategy said Wednesday the average purchase price of all its bitcoin purchases is $23,985 per digital token. It has spent $2.171 billion on bitcoin. Based on the price of bitcoin Wednesday morning, the firm’s holdings were worth nearly $4.5 billion.
Shares of MicroStrategy were higher by more than 6% early in Wednesday’s session. The company’s stock tanked over 20% Tuesday as the price of bitcoin slid.
Even so, MicroStrategy’s stock has been on a tear since the company announced its initial bitcoin purchase in August, rising over 400%, as some investors flocked to the shares to gain exposure to the cryptocurrency.
MicroStrategy CEO Michael Saylor has become a leading advocate for bitcoin, calling on other companies to buy the digital token as an investment. On Tuesday, he told CNBC he believes bitcoin will one day have a market value of $100 trillion. As of Wednesday, bitcoin has a total market cap of roughly $920.85 billion, according to Coindesk.
Watch CNBC’s full interview with Saylor on Tuesday below.
Shaktikanta Das voices ‘major concerns’ about cryptocurrency
Prime Minister Narendra Modi’s administration is proposing to prohibit all private cryptocurrencies in the country and create a framework for an official digital currency.
ETBFSI"We have certain major concerns about cryptocurrencies. We have communicated them to the government. It is under consideration in the government and I do expect and I think sooner or later the government will take a call and if required Parliament also will consider and decide," he said in an interview.
"I want to make it clear that the blockchain technology is different. Blockchain technology benefits have to be exploited, that is another thing. But on crypto we have major concerns from the financial stability angle and we have shared it with the government. The government will consider and take a call," Das said.
While Das did not elaborate further, the central bank had in the past expressed concerns on digital currencies being used for money laundering and terror funding.
The government is planning to introduce a bill in Parliament to bar companies and individuals from dealing in cryptocurrencies while creating a framework for an official digital currency.
The RBI had in 2018 banned banks and other regulated entities from supporting crypto transactions after digital currencies were used for frauds. The Supreme Court cut the curbs last year in response to a petition by cryptocurrency exchanges.
Das said the RBI is "very much in the game" and is getting ready to launch its own digital currency.
"Central bank digital currency is work in progress. RBI team is working on it, technology side and procedural side, how it will be launched and rolled out," Das added.
If this happens, the RBI will join other central banks including that of China, where it has electronic yuan.
While no date for the rollout has been set, the project is "receiving our full attention" and the central bank is "tying up several loose ends", Das said.
On inflation targeting, the governor said the central bank's internal working group will come out with its report on the target band in the next few days.
The Monetary Policy Framework, which mandates the Reserve Bank to maintain consumer price index or retail inflation at 4 per cent in a band of (+/-) 2 per cent, is coming up for review in March end.
"That (internal working group) report will be out very, very shortly, in the next few days. As far as flexible inflation targeting is concerned, this was a major structural reform undertaken by the government in 2016 and over the last 5 years the gains of this structural reform is visible," he told CNBC-TV18.
Finance Minister Nirmala Sitharaman had last week stated that the government would review the inflation target band as the five-year term for the Monetary Policy Committee (MPC) is coming to an end.
The six-member MPC, headed by the RBI Governor, decides on the monetary policy keeping in mind this inflation target band.
Counting the benefits of the monetary policy framework, Das said inflation expectations of households and businesses are well anchored and stability of inflation confidence to both domestic and foreign investors.
"But for these COVID months when it crossed 6 per cent, inflation expectations have been well anchored. And when inflation expectations are anchored and inflation remains around the target of 4 per cent ... it benefits the household, economy also... Also the other aspect is that the current framework has enough width 4 (+/- 2) per cent to deal with extraordinary situations, like the COVID...
"I would believe that the current framework has.... achieved a lot and these gains have to be preserved, consolidated and not jarred," Das said.
In the current fiscal, the retail inflation has hovered above the upper end of the target band of 6 per cent for the most part of the year and came back within 6 per cent limit in December 2020. In January 2021, it fell to a 16-month low of 4.06 per cent.
Das said in the near term, inflation would remain benign below 6 per cent, even though core inflation remains elevated at around 5-5.5 per cent.
"Since inflation expectation, today is well anchored, I do not expect suddenly inflation to spike because the Reserve Bank has necessary tools to monitor it very carefully and whatever projections we have given at this point of time, we stick to those projections. So in the near-term... the inflation is going to remain well within the 6 per cent upper threshold," Das said.
The RBI has projected retail inflation in the April-September period of next fiscal to be 5.2-5 per cent, and for the October-December period to be 4.3 per cent.
With regard to the budget announcement of privatisation of two public sector banks, Das said it is a major reform that the government has embarked upon and there is a constant dialogue with the RBI.
"We are directly concerned with two aspects. One is the 'Fit and Proper' criteria. The new owner should meet the criteria. We would be very keen that the bank, post takeover, is well capitalised and the promoter who takes it over has enough financial strength to capitalise the bank significantly," Das said, adding that amendment to Bank Nationalisation Act would be required.
The Reserve Bank had earlier this month said that it will allow retail investors to invest directly in Government securities (G-Sec) markets.
Asked about the timeline, Das said, "It is a work in progress, there is a technology aspect also. We will be issuing guidelines in the next few weeks."
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