MicroStrategy, the software company co-founded by crypto advocate Michael Saylor, has prepaid the remaining principal on its $205 million loan from Silvergate Bank, which the company took out last March. According to a filing with the U.S. Securities and Exchange Commission, the loan payoff was made last Friday and totaled $161 million. In addition, MicroStrategy has purchased another 6,455 Bitcoins for roughly $150 million over the past five weeks.
The loan was originally taken out as part of MicroStrategy’s Bitcoin buying spree, which saw the company use the loan to purchase Bitcoin as a hedge against inflation. With the payoff of the loan, 34,619 Bitcoins held as collateral were returned to MicroStrategy’s custody.
MicroStrategy’s recent Bitcoin purchases bring the company’s holdings up to 138,955 bitcoins, purchased at an average price of $29,817 each, worth roughly $3.88 billion at the current bitcoin price of $27,900.
The move by MicroStrategy to both pay off the loan and acquire additional Bitcoins has been praised by industry experts. Eric Turner, Vice President of Market Intelligence at cryptocurrency research firm Messari, said, “This is a smart move by MicroStrategy. By paying off the loan, they reduce their debt and improve their balance sheet, while the additional bitcoin purchases increase their exposure to the asset and further cement their position as a Bitcoin holder.”
MicroStrategy’s CEO, Michael Saylor, has been a vocal advocate for Bitcoin, regularly touting the asset’s potential as a hedge against inflation and a store of value. In a recent tweet, Saylor said, “Bitcoin is the world’s best collateral. It is the only collateral that can be delivered electronically, globally, 24/7, with final settlement in minutes.”
The move by MicroStrategy to acquire more Bitcoin comes as the cryptocurrency market experiences a downturn, with bitcoin dropping from a high of nearly $69,000 in November 2021 to its current price of around $27,400. Despite the market downturn, MicroStrategy appears to be bullish on Bitcoin’s long-term prospects and continues to accumulate the asset.
As the cryptocurrency market remains volatile, the move by MicroStrategy to pay off its loan and acquire more bitcoin may prove to be a smart strategy. The company’s willingness to bet big on bitcoin has already paid off, with MicroStrategy’s bitcoin holdings now worth nearly four times what the company paid for them.