Decoding MicroStrategy’s Bitcoin Buying Strategy: Why & How

How and why MicroStrategy buys Bitcoin

In 2020, MicroStrategy made history as the first publicly traded company to invest in Bitcoin. Since then, it has become the largest holder of this flagship cryptocurrency, with 140,000 coins on its balance sheet worth over $4.17 billion. MicroStrategy's bold move into Bitcoin has garnered attention from institutional investors. It has inspired other tech giants like Tesla, led by Elon Musk, and Square, led by Jack Dorsey, to also make similar investments in Bitcoin. 

Michael Saylor and MicroStrategy

In 1989, Michael Saylor and Sanju Bansal founded MicroStrategy, a company that specializes in developing software for analyzing external and internal data to support business decision-making. The company experienced rapid growth and went public in 1998, with its shares being traded on the stock exchange. From April 20, 1999, MicroStrategy's stock showed an impressive growth of +4500%. 

However, in 2000, the U.S. Securities and Exchange Commission (SEC) accused MicroStrategy of inflating revenue figures over the past two years. As a result, the company paid a fine of $11 million, but its stock plummeted by over 95%. Nevertheless, MicroStrategy remains a leader in its industry and continues to develop new products.

Growth of MicroStrategy's stock. Source: TradingView

In 2020, Michael Saylor decided to convert a portion of MicroStrategy's treasury reserves into Bitcoin. The company made its first cryptocurrency purchase, acquiring 21,454 BTC for $250 million at an average price of $11,652 per coin.

Saylor cited concerns about the “cheap money” policy implemented by central banks during the pandemic. This resulted in a significant increase in the money supply and was expected to lead to inflation. He sees Bitcoin as a way to protect against the risks of fiat currency devaluation.

This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash,

said Michael Saylor

Moreover, Michael Saylor has repeatedly stated that Bitcoin represents a revolutionary new technology, akin to the likes of Facebook or Google, but in the realm of money. He believes that the rapid digital transformation of assets is driving the future towards mobile digital wallets. And the widespread adoption of such wallets will pave the way for reliable digital assets, including Bitcoin. 

Saylor also sees Bitcoin as a new type of reserve asset, and predicts that other companies will soon follow MicroStrategy's example by converting a portion of their funds into Bitcoin. Furthermore, he anticipates that the long-term returns on Bitcoin investments will outstrip those of other assets. 

As a result, MicroStrategy has embarked on a strategy to purchase Bitcoin. In 2020, the company acquired cryptocurrencies worth $1.125 billion.

MicroStrategy’s buying activity in 2020

• August 11, 2020: Purchased 21,454 BTC for $250 million at an average price of $11,652. Source: Twitter/Form K-8 (sec.gov)
• September 14, 2020: Purchased 16,796 BTC for $175 million at an average price of $10,419. Source: Twitter/Form K-8 (sec.gov)
• December 4, 2020: Purchased 2,574 BTC for $50 million at an average price of $19,427. Source: Twitter/Form K-8 (sec.gov)
• December 21, 2020: Purchased 29,646 BTC for $650 million at an average price of $21,925. Source: Twitter/Form K-8 (sec.gov)

MicroStrategy's foray into Bitcoin investments created a buzz in the cryptocurrency industry, with each of their purchases making headline news. This caught the attention of major institutional investors, leading to an influx of capital into the industry. 

As of December 30, 2020, private and public companies, along with cryptocurrency-focused funds, held 1.151 million BTC in their portfolios, with a total value surpassing $32.4 billion.

Companies that have invested in Bitcoin as of December 30, 2020. Source: bitcointreasuries.net

On January 8, 2020, financial giant Morgan Stanley acquired an 11.9% stake in MicroStrategy. This move coincided with the rapid rise of MicroStrategy's stock. 

From the time MicroStrategy first purchased Bitcoin until February 9, 2021, its stock price skyrocketed by 900%. During the same period, Bitcoin itself experienced a historic bull run, with a remarkable 320% growth.

The growth of MicroStrategy's stock and Bitcoin. Source:TradingView

In early 2021, there was a buzz in the market as Tesla, led by Elon Musk, made headlines for investing $1.5 billion in Bitcoin. MicroStrategy CEO Michael Saylor also expressed his confidence in Bitcoin, stating that it appeared more attractive compared to investments in companies like Apple and Facebook:

I was an early investor in Apple, Facebook, Amazon, Google, eBay, Paypal 10 X'ing, and 20 X'ing my money. And I gotta tell you, none of them looked as good as Bitcoin does to me.

Throughout 2021, MicroStrategy was actively buying Bitcoin, not only with its own funds, but also by issuing debt securities and using the proceeds to invest in cryptocurrencies. Interestingly, the company used its own assets, including Bitcoin, as collateral for these bonds. 

MicroStrategy made some significant purchases at the market's peak, buying Bitcoin at almost maximum prices. For instance, on April 5th, the company acquired 253 BTC at a price of $59,339, and on November 29th, they purchased 7,002 BTC at a price of $59,187. Despite Bitcoin's value dropping by more than 50% in mid-2021, Michael Saylor reiterated that they were willing to weather any downturn and had no plans to sell their cryptocurrency holdings.

MicroStrategy’s buying activity in 2021

• January 22, 2021: Bought 314 BTC for $10 million at an average price of $31,808. Twitter/Form K-8 (sec.gov)
• February 2, 2021: Bought 295 BTC for $10 million at an average price of $33,810. Twitter/Form K-8 (sec.gov)
• February 24, 2021: Bought 19,452 BTC for $1.026 billion at an average price of $52,765. Twitter/Form K-8 (sec.gov)
• March 1, 2021: Bought 328 BTC for $15 million at an average price of $45,710. Twitter/Form K-8 (sec.gov)
• March 5, 2021: Bought 205 BTC for $10 million at an average price of $48,888. Twitter/Form K-8 (sec.gov)
• March 12, 2021: Bought 262 BTC for $15 million at an average price of $57,146. Twitter/Form K-8 (sec.gov)
• April 5, 2021: Bought 253 BTC for $15 million at an average price of $59,339. Twitter/Form K-8 (sec.gov)
• May 13, 2021: Bought 271 BTC for $15 million at an average price of $55,387. Twitter/Form K-8 (sec.gov)
• May 18, 2021: Bought 229 BTC for $10 million at an average price of $43,663. Twitter/Form K-8 (sec.gov)
• June 21, 2021: Bought 13,005 BTC for $489 million at an average price of $37,617. Twitter/Form K-8 (sec.gov)
• August 24, 2021: Bought 3,907 BTC for $177 million at an average price of $45,294. Twitter/Form K-8 (sec.gov)
• September 13, 2021: Bought 5,050 BTC for $242.9 million at an average price of $48,099. Twitter/Form K-8 (sec.gov)
• November 29, 2021: Bought 7,002 BTC for $414.4 million at an average price of $59,187. Twitter/Form K-8 (sec.gov)
• December 9, 2021: Bought 1,434 BTC for $82.4 million at an average price of $57,477. Twitter/Form K-8 (sec.gov)
• December 30, 2021: Bought 1,914 BTC for $94.2 million at an average price of $49,229. Twitter/Form K-8 (sec.gov)

Throughout 2022, the cryptocurrency market saw a bearish trend, with Bitcoin losing 78% of its value. Despite this downturn, Michael Saylor remained steadfast in his Bitcoin purchases and consistently emphasized its benefits in interviews:

Bitcoin is the most certain thing in a very uncertain world, it’s more certain than the other 19,000 cryptocurrencies, it’s more certain than any stock, it’s more certain than owning property anywhere in the world

Michael Saylor stepped down as CEO of MicroStrategy and took on the role of Executive Chairman on August 8, 2022. He stated that this decision would allow him to more efficiently focus on MicroStrategy's Bitcoin-related initiatives. 

MicroStrategy’s activity in 2022

• February 1, 2022: Purchased 660 BTC for $25 million at an average price of $37,865. Twitter/Form K-8 (sec.gov)
• April 5, 2022: Purchased 4,167 BTC for $190.5 million at an average price of $45,714. Twitter/Form K-8 (sec.gov)
• June 29, 2022: Purchased 480 BTC for $10 million at an average price of $20,817. Twitter/Form K-8 (sec.gov)
• September 20, 2022: Purchased 301 BTC for $6 million at an average price of $19,851. Twitter/Form K-8 (sec.gov)
• December 21, 2022: Purchased 2,395 BTC for $42.8 million at an average price of $17,871. Twitter/Form K-8 (sec.gov)
• December 22, 2022: Sold 704 BTC for $11.8 million at an average price of $16,761. Twitter/Form K-8 (sec.gov)
• December 24, 2022: Purchased 810 BTC for $13.6 million at an average price of $16,845. Twitter/Form K-8 (sec.gov)

In early 2023, MicroStrategy made two additional purchases of BTC, acquiring a total of 7,500 BTC for a sum of $179.3 million. 

MicroStrategy’s buying activity in 2023

• March 23, 2023: Purchased 6,455 BTC for $150 million, with an average price of $23,238. Twitter/Form K-8 (sec.gov)
• April 5, 2023: Purchased 1,045 BTC for $29.3 million, with an average price of $28,016. Twitter/Form K-8 (sec.gov)

At present, MicroStrategy holds 140,000 BTC, worth over $4.17 billion in total. The average cost per coin is $29,803.

All Bitcoin purchases

Chart of all Bitcoin purchases and sales by MicroStrategy.

MicroStrategy has boldly demonstrated its unwavering commitment to its Bitcoin accumulation strategy, even during bear markets. Despite facing criticism, MicroStrategy's CEO, Michael Saylor, has stated that the company will continue to accumulate Bitcoin and has no intention of selling it:

We're in here for the long term. Bitcoin is going to outlive all of us.