Robert Steinadler, 2 months ago

MicroStrategy pays Silvergate loan in full only to buy more Bitcoin

MicroStrategy has done it again! The company bought Bitcoin and while this doesn’t come as a surprise, the circumstance of the recent move is remarkable. Many critics have pointed out that investment in Bitcoin is risky. Most recently, the market proved that banks can be more volatile than Bitcoin. MicroStrategy took advantage of this fact and made another strong move that drove media attention to the company.

How much did MicroStrategy pay back to Silvergate and how big is the company’s BTC stack?

A discount on the loan

According to the latest press release, MicroStrategy paid back its loan with Silvergate for a 22% discount. The company took out a loan that involved a small cash collateral and another one in Bitcoin. Approximately 34,619 BTC were held on behalf of MicroStrategy as collateral. This collateral was paid back in full with the loan being repaid.

Silvergate was one of three U.S. banks that got into trouble. With Silvergate being especially open and friendly towards crypto businesses, some analysts feared that crypto companies in the U.S. could lose their access to banking. This fear wasn’t unfounded but it turned out that important players are doing well without Silvergate, Signature, or Silicon Valley Bank.

MicroStrategy managed to cut a great deal for themselves. The discount was only possible because Silvergate was voluntarily liquidating its business anyway.

Let’s buy more Bitcoin!

The discount was put to good use. The company announced that it bought another 6,455 BTC worth approximately $150 million. This raises the total Bitcoin stack of MicroStrategy to 138,955 BTC which was acquired for around $4.14 billion.

This puts the average price per Bitcoin at $29,817. Interestingly enough, many people speculated last year that MicroStrategy could get into serious trouble should the price drop further. Michael Saylor addressed these concerns when he was still CEO. According to him, the company can easily hold through deeper prices without even flinching. A contingency plan revealed that a Bitcoin price below $3,562 could become dangerous.

Therefore, even by holding Bitcoin with a loss, the company and its well-being are far from being at risk. Should MicroStrategy choose to continue buying Bitcoin the average cost will decrease. Putting the company into the right position as soon as the market picks up again. Dollar-cost averaging is also quite common among retail investors. It doesn’t require much knowledge or time. The strategy can be highly effective especially when investors are disciplined at sticking to their course. It seems that this is the case with MicroStrategy.

Featured image: (c) DCStockPhotography /

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