MicroStrategy buys Bitcoin as part of its capital allocation strategy

Business intelligence giant MicroStrategy becomes the first publicly traded company to purchase Bitcoin as a primary treasury reserve asset.

By · Aug 13, 2020 . 5min read

MicroStrategy to use Bitcoin

NASDAQ-listed MicroStrategy, the largest independent publicly-traded business intelligence company, has just bought 21,454 Bitcoin. The company announced in its quarterly report that it would adopt a ‘two-pronged’ capital approach. They now own $250 million in Bitcoin.

The first of the two prongs involved selling $250 million in class A stocks to its shareholders. It appears to have invested the money earned from that sale in Bitcoin. The trust MicroStrategy has placed in Bitcoin with such a large purchase reflects the stability of the cryptocurrency. Michael J. Saylor, CEO of MicroStrategy, stated that the current economic climate is the reason for their investment in Bitcoin. The economic uncertainty, coupled with the inevitable depreciation of fiat currency led his company to make the decision.

Saylor also released the following statement.

“Our investment in Bitcoin is part of our new capital allocation strategy, which seeks to maximize long-term value for our shareholders. 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. Since its inception over a decade ago, Bitcoin has emerged as a significant addition to the global financial system, with characteristics that are useful to both individuals and institutions. MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.”

Saylor also believes that Bitcoin offers a significant investment opportunity. This partly motivated MicroStrategy’s decision. Gold is just as safe a store of value, if not more reliable. They could have just as easily bought $250 million worth of gold. The potential for earning high returns, however, was too tempting to turn away from.

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