MicroStrategy is a NASDAQ-listed software company worth more than $1.2 billion.
And here, it has purchased 21,454 Bitcoins, effectively pouring all of its $250 million planned inflation-hedging funds into the popular digital currency.
When announcing its massive Bitcoin purchase, the company that also announced stock buyback in a Tuesday Securities and Exchange Commission filing, said that Bitcoin provided a "reasonable hedge against inflation."
“This investment reflects our belief that Bitcoin, as the world’s most widely adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash," said CEO Michael J. Saylor.
The CEO cited that the 'COVID-19' coronavirus pandemic and other forces for weakening fiat currencies.
In a press release, Michael J. Saylor that is also the founder of MicroStrategy, said that:
"Since its inception over a decade ago, Bitcoin has emerged as a significant addition to the global financial system, with characteristics that are useful to both individuals and institutions. MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy."
From global quantitative easing measures, the world's political and economic structure are facing uncertainty. But at the same time, those world issues gave strength to Bitcoin.
“We find the global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technical utility and community ethos of Bitcoin to be persuasive evidence of its superiority as an asset class for those seeking a long-term store of value," Saylor said.
"We believe that, together, these and other factors may well have a significant depreciating effect on the long-term real value of fiat currencies and many other conventional asset types, including many of the assets traditionally held as part of corporate treasury operations.”
When considering the various options of asset classes for potential investment, MicroStrategy observed distinctive properties of each, and saw that Bitcoin would provide not only a reasonable hedge against inflation, but also the prospect of earning a higher return than other investments.
Saylor believes that Bitcoin’s very structure will ensure that its value will only increase with time.
"Bitcoin is digital gold – harder, stronger, faster, and smarter than any money that has preceded it. We expect its value to accrete with advances in technology, expanding adoption, and the network effect that has fueled the rise of so many category killers in the modern era."
Given that the total amount of Bitcoin that can ever exist is 21 million, MicroStrategy in owning 21,454 Bitcoins means that the company controls 0.1% of the total Bitcoin supply.
This is something competitors can find increasingly expensive to replicate.
