Michael Saylor Vows Strategy Will Buy Bitcoin “Forever” Despite $5B Paper Loss

Looks like Michael Saylor is truly focused on buying Bitcoin (BTC) forever, even though Strategy (formerly MicroStrategy) is facing US$5 billion (AU$7.02 billion) in unrealised losses

The company said it bought 1,142 BTC last week for about US$90 million (AU$137 million), at an average cost of US$78,815 (AU$120,586) per coin. That brought its total to 714,644 BTC, which it put at about US$49 billion (AU$74.9 billion). With Bitcoin around US$68,829 (AU$105K), the position was worth about US$5.1 billion (AU$7.8 billion) less than what it paid.

The acquisition comes at a time when Bitcoin is down about 45% from its October peak of US$126,080 (AU$192K). The selloff has extended for weeks now, hitting Strategy at the worst time possible.

Strategy shares (MSTR) were down about 2.7% on Tuesday trading, and down nearly 66% over six months, trading around $134.58.

Related: ‘Weakest Bear Case in History,’ Analysts Proclaim

What Happens If Price Keeps Falling?

Strategy owns about 3.4% of Bitcoin’s total supply, prompting questions about whether it could be forced to sell to service debt or pay dividends if prices keep falling.

Saylor said those concerns are “unfounded,” arguing the firm has about 2.5 years of debt and dividend coverage in cash. He pointed to a US$1.44 billion (AU$2.2 billion) reserve set up in December to support dividend payments without selling Bitcoin, which he said has been increased through common-stock issuance.

Saylor said if Bitcoin dropped 90% and stayed there, the company would refinance rather than sell. He said BTC would have to fall to about US$8,000 (AU$12K) before that scenario becomes relevant.

Interestingly, hedge fund manager and investor Michael Burry claimed a few days ago that a Bitcoin breakdown could trigger a “sickening cascade” across financial markets, specifically targeting firms like Strategy.

Read more: Quantum Panic Over Bitcoin? CoinShares Says the Risk Is Real – but Far From a Crisis