MicroStrategy has officially announced that it has adopted Bitcoin as its primary reserve.
The company is listed on the Nasdaq under the symbol MSTR, and is the largest listed independent business intelligence company with nearly 2,400 employees.
The announcement also reveals that it has acquired 21,454 BTC for a total of approximately $250 million, including fees and expenses, consistent with its capital allocation strategy already announced with the publication of its second-quarter 2020 financial results on July 28th, 2020.
MicroStrategy‘s services, founded in 1989, are used by many Fortune Global 500 brands, and the company closed 2019 with $486 million in revenue and $34 million in profit.
The CEO of MicroStrategy Incorporated, Michael J. Saylor, said:
“Our investment in Bitcoin is part of our new capital allocation strategy, which seeks to maximize long-term value for our shareholders. 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. Since its inception over a decade ago, Bitcoin has emerged as a significant addition to the global financial system, with characteristics that are useful to both individuals and institutions. MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy”.
Microstrategy’s strategy with Bitcoin
Saylor also explained that the company took months to develop its new capital allocation strategy, and the choice of bitcoin was driven by a confluence of macro factors that are affecting the global economic landscape, and the corporate landscape, particularly with regard to the long-term risks involved in its corporate treasury program.
In the end, the company came to the conclusion that factors such as the economic and public health crisis, government financial stimulus measures, quantitative easing (QE), and global political and economic uncertainty could have a significant depreciation effect on the long-term real value of fiat currencies and many other conventional assets.
In considering the alternatives, MicroStrategy analyzed Bitcoin’s distinctive properties and finally came to believe that investing in BTC could provide not only a reasonable hedge against inflation, but also the prospect of a higher return compared to other investments.
In this regard, Saylor commented:
“We find the global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technical utility, and community ethos of Bitcoin to be persuasive evidence of its superiority as an asset class for those seeking a long-term store of value. Bitcoin is digital gold – harder, stronger, faster, and smarter than any money that has preceded it. We expect its value to accrete with advances in technology, expanding adoption, and the network effect that has fueled the rise of so many category killers in the modern era”.