MicroStrategy CEO compares borrowing to buy Bitcoin to early investing on Facebook

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The CEO of enterprise software company MicroStrategy, which has more than 105,000 bitcoins in its reserves, told CNBC on Friday that borrowing money now to buy more bitcoin is like investing in the one of today’s dominant technology companies at the start.

If you borrow billions of dollars at 1% interest and invest it in the next big tech digital network that you thought was the main Amazon, Google, or Facebook, why wouldn’t you? Michael Saylor of MicroStrategy said, according to CNBC. I mean, if I could borrow $ 1 billion and buy Facebook ten years ago for 1% interest, I think I would have done really well.

Saylor noted that his company has $ 2.2 billion in debt and pays about 1.5% interest on that debt. Since last August, his company has funded its purchases of massive amounts of bitcoin using the company’s cash flow, stock issuance, convertible debt, senior secured debt and ‘a record of $ 1 billion.

Our point of view is that being a leveraged, long-running bitcoin company is good for our shareholders, he said.

Saylor also said that the notoriety that its bitcoin purchases have given the company has increased its brand 100-fold.

MicroStrategy released its second quarter earnings report on Thursday, in which it said it plans to continue accumulating bitcoin on its balance sheet. For the quarter, the company recorded a $ 424.8 million write-down on its bitcoin holdings because accounting rules require it to do so when an asset’s price falls below its cost base. But the appreciation of an asset should only be reported once a gain is made from a sale.

At the end of June, MicroStrategys’ bitcoin holdings were worth $ 3.65 billion, reflecting the market price of bitcoin of $ 34,763 at the time. The non-GAAP (Generally Accepted Accounting Principles) digital asset cost base of these holdings was $ 2.74 billion, or $ 26,080 per bitcoin.

UPDATE (July 30, 19:33 UTC): Updated to add details on depreciation charges in the sixth paragraph.

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