The total market capitalization of the Nasdaq-listed business intelligence firm MicroStrategy, the largest corporate holder of the flagship cryptocurrency Bitcoin, is now above $100 billion, yet investors are paying a hefty Bitcoin premium on its shares.
The firm has been accumulating Bitcoin at a rapid pace, to the point it now has a total of 331,200 BTC on its balance sheet that were acquired for $16.5 billion and are now worth $31.3 billion.
The accumulation has meant that investors in MicroStrategy are gaining significant exposure to the price of Bitcoin, and some are using shares of the company as a proxy for investing in the cryptocurrency through an established, regulated exchange rather than using a crypto trading platform directly.
However, at a $100 billion market capitalization – which makes it one of the 100th largest companies in the world by the metric – investors are paying a hefty premium on its BTC holdings. The firm is trading at more than three times the value of its BTC.
$MSTR is trading at over 3x it’s bitcoin holdings. So the question is, would you rather:
A) pay $280,000 for a share of ownership of an equity that owns a Coinbase account which owns a legal IOU to 1 BTC
OR
B) pay $93,000 to own 1 BTC in self custody pic.twitter.com/SrTRC98uiA
— Pledditor (@Pledditor) November 19, 2024
Investors are paying a premium for MicroStrategy’s shares as the firm has been issuing equity and debt to keep on accumulating the cryptocurrency, taking advantage of its limited supply in the process. The company now already owns more than 1.5% of BTC’s circulating supply.
MicroStrategy Keeps Accumulating Bitcoin
The company’s Bitcoin accumulation strategy saw it acquire an additional 51,780 BTC earlier this month in a monumental $4.6 billion purchase, acquiring the coins at an average price of $88,627.
The company first started accumulating Bitcoin in 2020, when it spent $250 million to acquire 21,454 BTC and became the first publicly-traded company to adopt a Bitcoin allocation strategy.
Its initial purchase saw it add BTC at around $11,600 per coin, but as the price of the cryptocurrency kept on rising, the firm kept on accumulating, to the point that in September 2020 it spent an additional $175 million on the cryptocurrency, before putting in $650 million in December of that year.
