MicroStrategy has announced that it has repaid its $205 million loan collateralized in Bitcoin, contracted with Silvergate Bank. In addition, the company also acquired new BTCs.
MicroStrategy reimburses Silvergate Bank
Almost a year ago to the day, MicroStrategy announced that it had contracted $205 million loan backed by Bitcoin (BTC) from Silvergate Bank through its subsidiary MacroStrategy.
If this loan was unprecedented in traditional finance, it has been talked about several times in recent months. And for good reason, while the price of BTC continued to fall throughout 2022, rumors of margin calls appeared, raising fears of a liquidation of the loan. If these rumors were quickly denied, the recent bankruptcy of Silvergate has caused new concernsas to the security of the collateral used for the debt.
Again, MicroStrategy reassures the market, and announced earlier this week have repaid the entire loan in advance maturing on March 23, 2025:
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
Moreover, the company was even profitable on this operation, because this early repayment and the current situation of Silvergate enabled it to close the deal for $161 millionas shown on Form 8-K filed with the Securities and Exchange Commission (SEC).
This represents more than 21% discount on the $205 million originally due. In addition, MicroStrategy subsidiary Macrostrategy held a $5 million account at Silvegate, and 34,619 BTC served as collateral for the loan as of March 24.
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The acquisition of new BTC
Beyond this early repayment, MicroStrategy acquired 6,455 new BTC. These investments were made over a period from February 16 to March 23, for a total cost of $150 million and an average price of approximately $23,238 per unit.
This brings MicroStrategy’s Bitcoin reserve to 138,955 BTC, worth $3.75 billion at the time of this writing. The average unit cost of each BTC is now increased to $29,817.
The graph below offered by the Bitcoin Treasuries website even shows a correlation between the price of Bitcoin in brown, and that of the action of MicroStrategy represented in blue. New acquisitions are symbolized by the green bars:
Comparison between the price of BTC and that of the stock of MicroStrategy
While it is always interesting to see such an actor supporting the most important cryptocurrency at all costs, each new purchase raises the question of decentralization a little more. Indeed, these assets alone represent nearly 0.72% of the total amount of BTC.
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Source: MicroStrategy, Bitcoin Treasuries
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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