MicroStrategy Inc., which is an enterprise software firm, embraced Bitcoin investing and said that it had paid an average of $52,765 for approximately 20000 tokens. This took place in the last week after the issuing of $1.05 billion in convertible bonds.
The latest foray of the company is into the market of cryptocurrency, which is pushing towards the total holding from the last 90000 coins with a cost of $2.17 billion. MicroStrategy said that it is going to continue with the purchase of bitcoins, using all the excess cash that may issue a greater debt to finance the purchases. The shares of MicroStrategy have jumped high by 13%.
Bitcoin has rebounded with the two-day rout, which is rising up to 3.5% to $49625 at around 11:27 a.m. in New York. MicroStrategy has also paid for an average amount of price with nearly $24000 coins while giving it a gain of about 100%.
The purchasing of bitcoin does not come without any risk. The tokens can easily be subjected to impairment of the losses that can come up when the price seems to be dipping below the value that it had carried at any time of acquisition.
MicroStrategy has reported $70.7 million with cumulative impairment losses at the end of the last year. The company attributed this to the price fluctuation of bitcoin according to 10K of its filing. As per reports, if MicroStrategy made a purchase of its most recent bitcoin before the price hit a low of $45000 on Tuesday, they will probably be looking for almost $151 million of loss, based on the average purchasing price.
The company first came up with the announcement of the bitcoin buying last year. It said that bitcoin was used for corporate cash reserves. Since then, MicroStrategy has issued two rounds of convertible bonds to make additional purchases. The shares of MicroStrategy have thus surged more than 400% than the last year.