The profit is due to the appreciation of the value of Bitcoin over the past year, allowing MicroStrategy to claim tax benefits.
MicroStrategy, an Enterprise Business Intelligence (BI) platform that provides software, cloud computing, and other services to a wide array of clients, also happens to be one of the world’s largest Bitcoin holders, with approximately 140k Bitcoin in reserves.
Out-competing by HODLing
The decision to purchase Bitcoin in bulk was made by then-CEO Michael Saylor in 2020, citing concerns over inflation. According to him, simply HODLing BTC has given his firm an edge over rivals in the BI industry.
“Ultimately, it’s not easy to see what better strategy there might be. We found by simply acquiring and holding Bitcoin we can outperform our peers in the enterprise software business. The regulatory environment for Bitcoin is improving. As capital flows out of the crypto industry, it flows into Bitcoin.”
In The Green After More Than 2 Years
MicroStrategy repaid its $205M Silvergate loan at a 22% discount. As of 3/23/23, $MSTR acquired an additional ~6,455 bitcoins for ~$150M at an average of ~$23,238 per #bitcoin & held ~138,955 BTC acquired for ~$4.14B at an average of ~$29,817 per bitcoin. https://t.co/ALp9VLkTpt— Michael Saylor(@saylor) March 27, 2023
“We strengthened our capital structure by reducing leverage by fully repaying our bitcoin-backed loan. We also continued to strategically manage our balance sheet through the addition of 7,500 bitcoin in the quarter.”
Due in no small part to Saylor’s confidence in Bitcoin, his company is now reporting profits in a fiscal environment where most of his peers are faltering, as inflation and a possible looming recession dampen investors’ prospects.