Bitcoin Is About To Become Profitable Again For MicroStrategy

The more than $4 billion bet MicroStrategy Inc. co-founder and executive chairman Michael Saylor made on Bitcoin is making a surprising comeback after the value of the original cryptocurrency surged in the first quarter, showing that Saylor's bet is about to become profitable again. 

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As early as August 2020, Taylor announced that he would be purchasing Bitcoin, stating that due to the threat of rising inflation, the digital currency was a better investment than traditional staples like short-term Treasuries in the enterprise software industry. Due to wide price fluctuations since then, MicroStrategy has had to pay an impairment charge of more than $2.1 billion for quarterly paper gains and quarterly paper gains of up to $3.1 billion for cumulative gains. As of the end of the third quarter of 2009, the company's holdings had been underwater as of the end of the third quarter of 2009.

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In the last three months, Bitcoin has risen by about 73%, its greatest quarterly gain in nearly two years. Bitcoin fell 64% in value last year as a result of a series of scandals and bankruptcies in the industry. On Wednesday, bitcoin reached $29,171 just below the average purchase price of $29,817 set by the Tysons Corner, Virginia-based company.

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The company has written off more than half of its Bitcoin holdings in the last quarter, allowing the company to avoid the need to take an impairment charge. By the end of the year, MicroStrategy has written off about 50% of its Bitcoin holdings. 

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A popular proxy for cryptocurrency investors is Taylor Software, which is a slow-growing software maker that has decided to incorporate Bitcoin into its strategic focus in order to increase its profitability. Since August 2020, the company's shares have more than doubled, significantly outperforming the S&P 500 index's roughly 16% gain during the same period. 

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It is no secret that Saylor has been upping his bet on Bitcoin despite the volatile price of Bitcoin and the volatility in the shares. Saylor even borrowed money from the now failed crypto-friendly bank Silvergate to buy Bitcoin to fund his investments. 

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According to MicroStrategy's announcement on Monday, the company has purchased $150 million more Bitcoins, as well as paid off the balance of its $205 million loan partly backed by Bitcoin by selling shares. During the period of Feb. 16 to March 23, the company purchased 6,455 tokens, which is the largest purchase made by the company since April 2022.  

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Since Saylor first announced his purchase of Bitcoin in August 2020, according to Trade Algo's Index of US Treasury Bills, short-term government securities have returned approximately 2.5% during this time period.