MicroStrategy purchases $414.4 million worth of Bitcoin, with total BTC balance eclipsing $3.5 billion

MicroStrategy CEO Michael Saylor announced Monday via Twitter and company filing that the company purchased 7,002 bitcoins (BTC) at an average price $59,187. This is approximately $414.4million. MicroStrategy raised $414.4 million cash by selling 571,001 shares company stock between Oct. 1, and Nov. 29, at $732.16 each.

MicroStrategy purchased 7,002 additional bitcoins at a price of $59.187 per #bitcoin. We #hodl 121 044 bitcoins purchased for $3.57 Billion at an average price $29 534 per bitcoin as of 11/29/21. $MSTRhttps://t.co/OA8VWG1bZX
November 29, 2021 by Michael Saylor (@saylor).

The company now has 121,044 BTC worth up to $3.57 Billion as of Monday. It was purchased at an average cost of $29,534 per coin. Capital appreciation from other coins was also included.

MicroStrategy announced in August 2020 that it would adopt Bitcoin to its Treasury Reserve Asset. The firm cited the digital currency as a “dependable store-of-value” and an “attractive investment with higher long-term returns than cash. The firm also pointed out the unprecedented stimulus that governments are using to fight COVID-19, which could be a catalyst for inflation and depreciation in fiat currencies. MicroStrategy almost always purchases Bitcoin in every quarter since then.

Everyday investors usually lose when Bitcoins price drops and gain when it appreciates. MicroStrategy is not necessarily experiencing this. According to the earnings conference transcript, Phong Le (President and Chief Financial Officer of MicroStrategy) stated that Bitcoin holdings were classified as “indefinitely-lived intangible asset under applicable accounting rules.” If the fair or market value of the Bitcoin falls below its book value, then the company will have to recognize impairment costs. These impairment charges can be used to offset the companys corporate income tax liability.