MicroStrategy purchases $414.4 million worth of Bitcoin with total BTC balance eclipsing $3.5 billion

Michael Saylor, CEO of enterprise data analytics company MicroStrategy, announced Monday morning via a Twitter post and company filing that the firm purchased an additional 7,002 Bitcoin (BTC) worth approximately $414.4 million and an average price of $59,187 per coin. MicroStrategy sold 571,001 shares of company stock between Oct. 1 and Nov. 29 at $732.16 apiece, raising a total of $414.4 million in cash.

MicroStrategy has purchased an additional 7,002 bitcoins for ~$414.4 million in cash at an average price of ~$59,187 per #bitcoin. As of 11/29/21 we #hodl ~121,044 bitcoins acquired for ~$3.57 billion at an average price of ~$29,534 per bitcoin. $MSTRhttps://t.co/OA8VWG1bZX

— Michael Saylor⚡️ (@saylor) November 29, 2021

As of today, the company now owns 121,044 Bitcoin worth up to $3.57 billion. They were acquired at an average price of $29,534 per coin and included capital appreciation from previous coins.

Last August, MicroStrategy declared it would adopt Bitcoin as its treasury reserve asset, citing the digital currency being a “dependable store of value” and an attractive investment with greater long-term return potentials than holding cash. In addition, the firm drew attention to the unprecedented stimulus being printed by governments to combat COVID-19 as a catalyst for potential inflation and subsequent depreciation of fiat currencies. Since then, MicroStrategy has almost consistently purchased Bitcoin every single quarter.

Normally, everyday investors suffer losses when the price of Bitcoin goes down and gains when the price appreciates. However, that's not necessarily the case for MicroStrategy. According to its earnings conference transcript published last month, Phong Le, president and chief financial officer of MicroStrategy, said that the company's Bitcoin holdings are classified as 'indefinite-lived intangible assets under applicable accounting rules.' This means that at any time subsequent to their acquisition, if the fair value, or market value, of the Bitcoins dips below their book value, then the company will need to recognize impairment charges. These impairment charges can then be used to legally offset its corporate income taxes liable.