The billion-dollar business intelligence software firm MicroStrategy has made a massive $250 billion bet on bitcoin, investing in the cryptocurrency as part of its capital allocation strategy.
According to an announcement published by the business intelligence software firm, it purchased a total of 21,454 BTC at an aggregate price of $250 million, including fees and expenses. The cryptocurrency was bought as part of its two-pronged capital allocation strategy, which also included the launch of a cash tender off of up to $250 million worth of its class A common stock in a modified Dutch Auction offer.
In its announcement, MicroStrategy detailed its decision to invest in BTC was influenced by “factors affecting the economic and business landscape,” which the firm believes are creating “long-term risks” for its corporate treasury program.
These factors include the economic and public health crisis created by the COVID-19 pandemic, the “unprecedented government financial stimulus measures including quantitative easing adopted around the world,” and global political and economic uncertainty.
Michael J. Saylor, the firm’s CEO, noted the move is looking to maximize long-term value for shareholders, and added:
This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.
Saylor added that BTC has “emerged as a significant addition to the global financial system,” and that MicroStrategy “has recognized Bitcoin as a legitimate investment asset that can be superior to cash.” As a result, BTC is now the principal holding in its treasury reserve strategy.
The strategy to allocate capital into bitcoin was deliberated for months. As CryptoGlboe reported, last week MicroStrategy revealed it was considering investing the $250 million either in BTC, gold, or in silver. It chose BTC because of its properties, which led the firm to believe “the cryptocurrency would provide not only a reasonable hedge against inflation, but also the prospect of earning a higher return than other investments.”
Saylor further pointed out:
We find the global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technical utility, and community ethos of Bitcoin to be persuasive evidence of its superiority as an asset class for those seeking a long-term store of value.
The announcement makes it clear MicroStrategy sees bitcoin as digital gold and expects its price to increase in the future, pointing to the investment in bitcoin as an opportunity to earn better returns and preserve the value of its capital compared to holding cash.
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