How Low Does Bitcoin Have To Fall Before MicroStrategy Is Forced Out Of Its Massive Pile Of Coins?

Zinger Key Points
  • MicroStrategy took a $205M loan from Silvergate Bank in March to purchase Bitcoin
  • The company could face a margin call if BTC falls below $21,000
  • CEO Michael Saylor had clarified in May about the level BTC has to fall for MSTR to post other collateral

MicroStrategy Incorporated MSTR is the biggest Bitcoin BTC/USD holder among U.S. companies, but the Michael Saylor-led company may have to shed some of it if the apex coin keeps on tumbling. 

The Borrowing: In March 2022, MicroStrategy borrowed $205 million from Silvergate Capital Corp’s SI Silvergate Bank, collateralized against its Bitcoin holdings to buy cryptocurrency and pay fees, interest, and expenses linked to the loan transaction.

MicroStrategy holds 129,218 BTC, valued at $2.76 billion, according to Bitcoin Treasuries data, making it the largest holder of the apex coin ahead of Tesla Inc TSLA.

The cost basis of MicroStrategy’s holdings is $3.965 billion, which implies the company is at an unrealized loss of almost $1.2 billion.

The Margin Call: MicroStrategy CFO Phong Le said on the company’s first-quarter earnings call in May that if Bitcoin’s price falls below $21,000, the company would face a margin call and could contribute “more Bitcoin to the collateral package'' to deter it.

Le had said that MicroStrategy has about 95,643 encumbered BTC and the company had “quite a bit of uncollateralized Bitcoin.”

Bitcoin was trading at $22,043.76 at press time, according to data from Benzinga Pro.

Saylor On Posting Collateral: Last month, Saylor said the company needs to maintain $410 million as collateral with regard to the Silvergate loan, and it has 115,109 BTC it can pledge.

“If the price of Bitcoin falls below $3,562 the company could post some other collateral,” Saylor said in May.

Despite the cryptocurrency downturn, there is no indication Saylor is backing away from his singular focus on Bitcoin.
An aerospace engineer by education, Saylor tweeted this month that “engineers don't diversify, they concentrate," with a Bitcoin hashtag.

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Posted In: BitcoinMichael SaylorSilvergate BankCryptocurrencyNewsSmall CapTop StoriesMarkets

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