Good day everybody,
Welcome to CryptoGod-1's blog on all things crypto. As I am sure plenty of you are well aware of the name Michael Saylor and MicroStrategy, and he has recently announced how the business has managed to purchase an additional 6,455 Bitcoin through some smart manoeuvres and thanks to the recent bank collapse.
Loading Up on Bitcoin
MicroStrategy (MSTR) is a software company which was co-founded by Michael Saylor and is known for being a major advocate of cryptocurrency, especially Bitcoin. The company found itself in an usual and beneficial position recently, as they benefitted from the failed crypto focused bank Silvergate. They had an outstanding loan with the banking institution, which sat at a pricey sum of $205 million.
According to a Tweet from Saylor, which can be seen below, the company paid off the remaining principle of said loan early, allowing them to free up funds to acquire more Bitcoin. The repayment was done on a voluntary basis, allowing them to pay off the loan at a discount of around 22%.
The loan had originally been agreed between MicroStrategy and Silvergate Bank back on the 22rd of March 2022 for a sum of $205 million, which allowed the company to make use of the funds as part of a Credit and Security Agreement with the bank. To pay off the loan early MicroStrategy collateralised certain Bitcoins owned by the company, along with a $5.0 million cash reserve account held by Microstrategy at Silvergate Bank. The bank had gone into voluntary liquidation, as announced on the 8th of March this year, although a couple of days prior to that announcement the bank had terminated its crypto payments network, the Silvergate Exchange Network (SEN).
A filing with the U.S. Securities and Exchange Commission on Friday the 24th of March confirmed as much, with the SEC filing the details for a 'Prepayment, Waiver and Payoff to Credit and Security Agreement' to the sum of $161.0 million as follows:
"MicroStrategy voluntarily prepaid Silvergate approximately $161.0 million (the ‘Payoff Amount’), in full repayment, satisfaction, and discharge of the Loan and all other obligations under the Credit Agreement."
MicroStrategy commented on the payment, clarifying that
“Upon Silvergate’s receipt of the payoff amount, the Credit Agreement was terminated, and Silvergate released its security interest in all of Macrostrategy’s assets collateralizing the loan, including the bitcoin that was serving as collateral.”
As part of the satisfaction of the loan agreement, MicroStrategy were returned a sum of 34,6191 Bitcoin the bank had held as collateral. With MicroStrategy having purchased roughly $150 million worth of Bitcoin over the last five weeks, totalling 6,455 Bitcoin (about $23,238 per coin), they are now in possession of 138,955 Bitcoin. The average purchase price of these has come in at $29,817 each, which equals roughly $3.88 billion at the current bitcoin price of $27,900.
MicroStrategy also disclosed that over the course of the last year it had raised $339.4 million through the sale of its shares, with the proceeds being used to pay back the loan from Silvergate. After the confirmation of the announcement, shares of MicroStrategy were up 0.9% premarket on Monday the 27th of March 2023.
When we consider a total Bitcoin supply of 21 million, with MicroStrategy holding 138,955 means they are now the proud owners of 0.66% of the total supply of Bitcoin, albeit this does not account for lost coins meaning in reality they likely own a higher percentage of the total Bitcoin which will ever truly end up available in circulation.
Its quite eye opening when we consider that MicroStrategy, for all its wealth and loading up on Bitcoin, still owns even less than 1% of the total available supply. Certainly for the everyday joe's among us we could only dream of owning a sum such as 1% of the total amount of Bitcoin, but with the way things are going, it is inevitable that MicroStrategy will get there in time. One step at a time but they are leading the way, that's for sure, and it is more than likely that they will be announcing more Bitcoin purchases down the line.
Have a great day.
Peace. CryptoGod-1.
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