MicroStrategy, a business intelligence software company and a major investor in Bitcoin, is continuing its purchases of the crypto-currency despite the recent market turmoil. The company recently announced the purchase of an additional 6,455 BTC, or about $150 million, at an average price of $23,238 per unit as of March 23.
More Bitcoin (BTC) for MicroStrategy with the purchase of 6,500 BTC
The new acquisition increased MicroStrategy's Bitcoin holdings to 138,955 BTC, with a total value of $4.1 billion, or an average price of $29,817 per coin. Michael Saylor, MicroStrategy's co-founder and former CEO, said the acquisition was made after the company repaid its $205m loan to Silvergate at a 22% discount.
MicroStrategy's moves into Bitcoin reflect the company's confidence in the crypto-currency, as well as its belief that Bitcoin is a solid store of value and a hedge against inflation. Since their first investment in Bitcoin in August 2020, MicroStrategy has accumulated a significant stock of BTC, the king of cryptocurrencies, and continues to buy despite market fluctuations.
These latest acquisitions have strengthened MicroStrategy's position as one of the largest institutional investors in Bitcoin. The company has also paved the way for other companies looking to add Bitcoin to their treasury, creating increased demand for the crypto-currency.
MicroStrategy's tax optimization in December 2022
Last December, Michael Saylor sold 704 BTC, a small portion of his golden nest egg. The intentional decision to sell his bitcoins was to take a loss and thus optimise his company's tax return. This may seem counter-intuitive, but it is a common practice among some investors. By selling part of one's assets at a loss, it is possible to reduce taxes and generate a tax benefit.
In addition, selling Bitcoin also allowed Michael Saylor to take advantage of an exception to the rule against fictitious selling of assets at a loss and buy them back less than 30 days later. Indeed, crypto is not considered a stock in the US, so there is no specific rule that applies to it.
After selling the 704 BTC, MicroStrategy bought back 810 BTC only two days later. Thus, Michael Saylor never intended to remove any Bitcoin from his war chest. True to his DCA (Dollar Cost Averaging) strategy, he is still buying them in 2023 as we just saw above.
