Bitcoin bull Michael Saylor doubled down on his long-term belief, announcing another massive purchase of nearly $1 billion worth of Bitcoin.
Key points:
-
Strategy purchased $980 million in Bitcoin, increasing its holdings to 671,268 Bitcoins.
-
The purchase was funded through a stock sale
-
Prior to the acquisition, Strategy created a $1.44 billion cash reserve to avoid selling Bitcoin and ensure dividend and debt payments during market volatility.
Strategy disclosed in a Form 8-K filed on December 15 that it purchased 10,645 Bitcoins between December 8 and 14, spending US$980.3 million, with an average price per Bitcoin of US$92,098.
The acquisition will be funded by proceeds raised by the company through an ATM stock and preferred stock offering, including the sale of common stock and various preferred stock classes.
Following the latest acquisition, Strategy’s total Bitcoin holdings climbed to 671,268 BTC, with a total purchase cost of $50.33 billion and an average price per Bitcoin of $74,972.
The move further solidifies the company’s position as the world’s largest corporate holder of Bitcoin, well ahead of other publicly traded companies.
Last week, Strategy also purchased 10,624 Bitcoins for approximately $962.7 million, with an average price per Bitcoin of $90,615.
The new purchases come as Strategy has built up $1.44 billion in reserves to pay dividends and debt interest in cash to avoid selling its large Bitcoin holdings during periods of severe market volatility.
Chief Executive Phong Le said the company’s newly built cash reserves were designed to calm investor anxiety about its ability to withstand Bitcoin’s sharp decline.
Le said the move follows weeks of speculation over whether the company can continue to meet its dividend and debt commitments amid worsening market conditions.
“We are very much part of the crypto ecosystem and the Bitcoin ecosystem,” Le said. “That’s why we decided a few weeks ago to start raising capital and putting dollars on our balance sheet to get rid of this FUD.”
The reserve, funded through share sales, is designed to ensure dividend payments for at least 12 months, with plans to extend the buffer period to 24 months.
Concerns about the stability of Strategy’s dividend have grown in recent weeks as Bitcoin has retreated from its highs.
Lin Tran, senior market analyst at XS.com, said Bitcoin fell below the $90,000 mark this week, reinforcing the cautious short-term outlook as investors retreated from risk assets.
