Michael Saylor & MicroStrategy, Inc.: Exactly How Many Bitcoins Do They Hold?
What is the exact and total amount of Bitcoin that Michael Saylor holds — not only privately but also through his MicroStrategy corporation? Which tactics did Michael Saylor use to quickly access billions of dollars of liquidity to buy bitcoin? Read on to find out.
Who is Michael Saylor?
- Michael Saylor is the CEO of MicroStrategy Inc., an analytics & software business he co-founded in 1989.
- After more than 30 years in business, Michael Saylor also remains chairman of the board and controls 72% of the voting rights.
Taking a look at the MicroStrategy, Inc. balance sheet before they started buying BTC
Before starting to aggressively buy bitcoin, MicroStrategy Inc. was considered a very healthy company — but beyond its “high growth” years.
They were selling a mature software product with comfortable margins to big corporate clients. The business was reliably gushing out cash for its shareholders quarter after quarter.
How much cash are we talking?
By the second quarter of 2020 roughly 60% of MicroStrategy’s balance sheet (a little more than 500 million dollars) was made up of cash and highly liquid short-term investments.
So when the outbreak of the pandemic in 2020 kicked off a tsunami of money printing by governments around the world, all of MicroStrategy’s reserves…
- half a billion dollars
- saved up through 3 decades of business success
- basically Michael Saylor’s entire life’s work
…were sitting in cash.
Michael Saylor has famously described that holding all that value in US dollars felt like “watching a melting ice cube”.
The moment Michael Saylor had his epiphany of “The Melting Ice Cube”
(Watch this 2 minute clip from a recent interview to see Michael Saylor describe the moment he had his epiphany of “the melting ice cube”.)
Michael Saylor came to the realisation that Bitcoin was the best asset he could hold in order to preserve the wealth he had created over a 30 year career.
And because Michael Saylor still has the majority of the voting rights at MicroStrategy, and he still controls the board of his company, he was able to act fast.
Phase I: Bitcoin as Treasury Reserve Asset.
The first bitcoin investment by MicroStrategy happened in August 2020, when they went ahead and swapped 250 million of their USD reserves for 21,454 BTC.
Then, on September 11 2020, only 1 month after their first Bitcoin buy, MicroStrategy filed an 8-k form with the SEC, which is used to report “unscheduled material events or any corporate changes that could be relevant to shareholders” — which is just a fancy way of saying that Michael Saylor was managing expectations in the stock market.
In that 8-k report, MicroStrategy not only announced that their board had now formally and officially adopted Bitcoin as its primary treasury reserve asset, but that “the Company’s holdings of bitcoin may increase beyond the $250 million investment that the Company disclosed on August 11, 2020.”
And then, 3 days later, on the 14th of September 2020, MicroStrategy announced that they had bought another 16,796 BTC using a further 175 million USD from their dollar cash reserves for the purchase, raising their bitcoin holdings to a total of 38,250 BTC at this point.
Then, on Dec. 5 2020, MicroStrategy announces another 2,574 BTC purchased with 50 million USD from their cash reserves.
Taking stock thus far (December 2020)
Within a period of less than 4 months, MicroStrategy had taken $475 million (of what was once roughly $540 million in USD cash reserves) and bought Bitcoin with it.
And at this point, the company was holding 40,824 BTC on its balance sheet.
However, Michael Saylor had also been buying bitcoin privately…
Michael Saylor’s private bitcoin holdings
On the 28th of October, he announced on Twitter that:
“I personally #hodl 17,732 BTC which I bought at $9,882 each on average. I informed MicroStrategy of these holdings before the company decided to buy #bitcoin for itself.”
Can it get any more bullish than putting your personal net worth and your business’s entire cash reserves into Bitcoin?
As we are about to find out — Michael Saylor was only just getting started.
If Phase I was exchanging all his personal and corporate cash reserves for bitcoin, then Phase II of his Bitcoin Accumulation Strategy could be titled “leveraging up”.
Phase II: Leveraging up
2 days after MicroStrategy had finalized the conversion of almost 90% of its cash into bitcoin they announced:
December 7, 2020:
MicroStrategy Announces Proposed Private Offering of $400 Million of Convertible Senior Notes […] due 2025 in a private offering to qualified institutional buyers. […] MicroStrategy intends to invest the net proceed s from the sale of the notes in bitcoin in accordance with its Treasury Reserve Policy.
Let’s translate that:
MicroStrategy — which up to that day was an analytics and software company with steady cash flows, a very healthy balance sheet and minimal debt — announces that they want to raise at least $400 million of debt in the financial markets to buy more bitcoin.
Now, you may wonder: Why would somebody lend out $400 million to MicroStrategy, just for them to turn around and buy bitcoin with it?
Wouldn’t it make more sense to directly buy bitcoin or some kind of bitcoin derivative? Well, at that time (December 2020), almost all financial institutions — for reasons of governance and regulatory constraints — could not buy bitcoin, neither directly nor through some kind of bitcoin derivative or financial instrument.
Therefore, one of the very few legitimate ways for most fund managers to get any kind of bitcoin exposure was to buy these debt notes from MicroStrategy, because “on paper” this was simply a NASDAQ listed software company issuing some corporate bonds .
Not surprisingly, the debt offering was hopelessly over-subscribed and only 4 days later Michael Saylor announced that MicroStrategy had raised not 400 million, but 650 million dollars, allowing them to borrow 250 million dollars more than what they had asked for — by offering a 5 year convertible note at 0.75% interest.
That’s a cost of less than 5 million dollars a year, for 5 years, in order to buy more than half a billion dollars worth of bitcoin.
On the 21st of December 2020, Michael Saylor tweeted that MicroStrategy had added another whopping 29,646 BTC to its bitcoin holdings, which had been bought with those $650 million dollars of borrowed money.
Meaning that at the end of 2020, just as the bitcoin price was about to break the $30,000 barrier for the first time, $MSTR was already holding more than 70,000 BTC.
Phase III: On the Bitcoin Standard
One could make the case that MicroStrategy’s huge bitcoin buys in 2020…
- each one of them at a volume of anything between $50 million and $650 million.
- in large parts using borrowed money,
- accompanied by a lot of press releases and Michael Saylor being on a lot of CNBC interviews and podcasts…
…were in some way a short-term, speculative play to pump the bitcoin price, or to pump the MicroStrategy stock, or to pump both of them.
And some publications in the finance media were definitely starting to push that as the narrative.
However, on January 22 2021 began what some would call the real bitcoin buys of MicroStrategy, Inc., when Michael Saylor announced that MicroStrategy had bought another measly 10 million dollars of bitcoin.
“Only” 10 Million? After buying more than a billion over the previous months? What was going on?
MicroStrategy was basically sweeping the excess cash flows the company had earned over the past few months of doing their good old software business into bitcoin.
And these small, regular buys continued:
- Another 10 million on February 2, 2021
- Another 15 million on March 1, 2021
- And it keeps going: 10 million here, 15 million there, all-in-all 8 such purchases of bitcoin by MicroStrategy this year so far.
Even though these purchases are dwarfed by the more than 1 billion dollars worth of bitcoin Michael Saylor and MicroStrategy had bought the previous year, these smaller, regular bitcoin purchases were strong signal of Michael Saylor’s true, long-term conviction.
In the 6 months since MicroStrategy’s first bitcoin purchase in August 2020, the bitcoin price had gone up a lot, and MicroStrategy was well in the green with those purchases. Their balance sheet allowed for even more debt to be borrowed against it. So that’s exactly what they did.
Supply and Demand
On February 16, 2021, Michael Saylor announced that MicroStrategy was considering offering another round of convertible notes, this time to raise at least 600 million dollars.
This debt offering again was totally over-subscribed, and over the next few days, MicroStrategy completed a $1.05 billion dollars of corporate debt.
And the interest to be paid on those more than $1.05 billion dollars? Zero.
The bitcoin price at this point was sitting a little above 50,000 USD. What does a billion dollars get you at that price: Another 19,452 Bitcoins added to the MicroStrategy stack.
Clearly, this second debt offering was an even bigger success than the first, and both were completely over-subscribed by more than half the initial amount. With that much demand, sounds like they could… do it again?
Third time’s the charm
On June 7 2021, Michael Saylor tweeted that Microstrategy considers the offering of $400 million of Senior Secured Notes. By now this will all sound very familiar:
- The offering is over-subscribed.
- A few days later the round completes with a volume of $500 million.
- MicroStrategy goes ahead and buys bitcoin with it.
- Another 13,005 Bitcoins for the MicroStrategy bitcoin vault.
Total count of Michael Saylor’s and MicroStrategy’s bitcoin holdings (August 2021)
So for now, we can do a total count of all the bitcoin Michael Saylor owns either privately or through MicroStrategy.
First, there are three distinct modes phases during which MicroStrategy has been acquiring Bitcoin:
- In Phase I, they converted their entire cash reserves into bitcoin between August and December of 2020, acquiring 40,824 BTC.
- In Phase II, through leveraged buys with funds raised by issuing corporate debt in December 2020 as well as February and June 2021, they bought 62,103 BTC.
- In Phase III, since they started buying regularly with the free cash flows from their business operations, they have bought another 2,157 BTC.
Finally, remember that according to his tweet from last October, Michael Saylor himself holds at least 17,732 BTC privately.
This makes a total of 122,816 BTC.
However, it looks like Michael Saylor and MicroStrategy aren’t done buying bitcoin. Rather, they seem to be preparing for phase 4 of their bitcoin accumulation strategy…
Phase IV: Selling Equity
On the day the last $500 million round of debt offering completed, MicroStrategy announced in an SEC filing that they are getting the paperwork done to have the flexibility to sell up to $1 billion of MicroStrategy shares at a moment’s notice in the open market — in order to buy more bitcoin with the proceeds.
So after turning MicroStrategy into a quasi-bitcoin-fund they are now prepared to sell off parts of the whole company in order to buy even more bitcoin.
Seems like this story is far from over, and Michael Saylor will continue to find ways to buy bitcoin.
But roughly 105,000 BTC on MicroStrategy’s balance sheet and another 17,732 BTC in Michael Saylor’s private bitcoin wallet — these are the numbers for now.
Added together, the exact number is 122,816 BTC, which means that (at the time of this article’s writing) Michael Saylor directly or indirectly controls roughly 1 out of 170 bitcoins that will ever exist.
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