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MicroStrategy’s Profitable Investment in Bitcoin: A Case Study

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On April 11th, it was reported that as the price of Bitcoin broke through the $30000 threshold, MicroStrategy\’s previous investment of approximately $4.17 billion in 140000 Bitcoin

MicroStrategy’s Profitable Investment in Bitcoin: A Case Study

On April 11th, it was reported that as the price of Bitcoin broke through the $30000 threshold, MicroStrategy’s previous investment of approximately $4.17 billion in 140000 Bitcoins (with an average purchase cost of $29803) has returned to a floating profit state after 10 months.

MicroStrategy’s Bitcoin holdings returned to floating profit status after 10 months

MicroStrategy, a leading business analytics and mobility platform provider, made headlines in 2020 when it announced its decision to invest a significant portion of its treasury cash in Bitcoin. That investment has turned out to be an extremely profitable one, with the latest reports showing that MicroStrategy’s investment in Bitcoin is now in a floating profit state. In this article, we dive deep into the details of this case study to understand how MicroStrategy pulled off this feat.

Background

On August 11, 2020, MicroStrategy announced in a press release that it had purchased 21,454 Bitcoins at a cost of $250 million. At that time, the decision was met with skepticism by many in the business community, as Bitcoin was seen as a highly volatile and unpredictable asset. However, MicroStrategy CEO Michael Saylor was confident in his decision. He believed that Bitcoin was a safe-haven asset that could protect his company’s cash reserves against inflation and currency devaluation.

The Investment

After the initial purchase of 21,454 Bitcoins, MicroStrategy continued to invest heavily in the cryptocurrency. Over the next few months, the company made a series of additional purchases, acquiring a total of 140,000 Bitcoins by the end of 2020. The average purchase cost of these Bitcoins was $29,803, resulting in a total investment of approximately $4.17 billion.

The Returns

The decision to invest in Bitcoin has turned out to be a wise one for MicroStrategy. After the price of Bitcoin broke through the $30,000 threshold in early 2021, the value of MicroStrategy’s Bitcoin holdings soared. As of April 11th, MicroStrategy’s investment in Bitcoin had returned to a floating profit state after 10 months. The value of the company’s Bitcoins had risen to $4.4 billion, resulting in a profit of $230 million.

The Takeaway

The success of MicroStrategy’s Bitcoin investment has been hailed by many as a milestone moment for the cryptocurrency. It has shown that Bitcoin can be a viable investment option for large corporations and has helped to dispel some of the fears surrounding the asset’s volatility. Additionally, MicroStrategy’s investment has helped to cement Bitcoin’s status as a legitimate store of value and inflation hedge.

FAQ

Q1. What is Bitcoin?

A1. Bitcoin is a digital currency that was created in 2009 by an unknown person using the name Satoshi Nakamoto. Transactions are made with no middlemen – meaning, no banks!

Q2. Is Bitcoin a good investment?

A2. This is a question that is contested in the investment world. Some people believe Bitcoin is an excellent investment opportunity, while others have strong reservations about its volatility and long-term sustainability.

Q3. What is MicroStrategy?

A3. MicroStrategy is a business analytics and mobility platform provider that offers a range of software solutions for enterprise companies.

Conclusion

MicroStrategy’s investment in Bitcoin has been a success story that has surprised many. The decision to invest in the cryptocurrency, initially met with skepticism, has turned out to be a wise one, with the company now enjoying a floating profit of $230 million. The success of MicroStrategy’s investment highlights the growing acceptance of Bitcoin as a legitimate investment option for large corporations. It remains to be seen whether other companies will follow MicroStrategy’s lead and invest in Bitcoin, but this case study has certainly opened up the conversation.

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