The American IT firm MicroStrategy claimed that it’s mulling the potential of yield generation on its bitcoin (BTC) holdings. At the moment, the firm holds BTC 129,218 (USD 4.97bn). The majority of this figure is “unencumbered,” and it is locked in the its subsidiary firm MacroStrategy.
The organization, that has been buying BTC having its balance sheet, issued an economic performance report for Q1 of 2022, where it noted that could “conservatively explore future yield generation opportunities” on its “unencumbered” tokens. This implies excluding the BTC 19,466 (USD 748.6m) that the organization used to have a ground-breaking USD 205 million BTC-backed, three-year loan in the bank Silvergate recently. Which means MicroStrategy could “explore” its yield generation options having a whopping BTC 95,643 (3.68m).
However, even though the firm’s BTC-buying strategy might prove shrewd within the lengthy-term, it seems that short-term discomfort might be inevitable. A stagnant BTC market in recent several weeks has bought by using it cumulative impairment losses well over USD 1 billion for MicroStrategy, on the top of aggregate costs worth USD 4 billion.
The organization described that “the original cost basis and market value” of their bitcoin holding were “USD 3.967 billion and USD 5.893 billion correspondingly.” This, it noted “reflects a typical cost per bitcoin of roughly USD 30,700 along with a market cost per bitcoin of USD 45,602.79 correspondingly.”
Bitcoin is presently slumping toward the USD 38,000 mark after days spent bumping around underneath the USD 40,000 threshold.
However, it appears unlikely that MicroStrategy could “explore” its yield options using the whole of their “unencumbered” BTC. Should BTC fall in value considerably throughout the Silvergate loan, MicroStrategy will have to combine BTC utilized as collateral within the loan to prevent a margin call.
However the firm’s top financial executive Phong Le noted that bitcoin prices will have to fall by around 50% from current levels before this type of call would occur. MicroStrategy adopted up its loan move with another BTC buy – spending some USD 190.5 million on tokens.