MicroStrategy CEO and notorious Bitcoin bull, Michael Saylor, has responded to rumors that some of the firm’s Bitcoin (BTC) holdings purchased using debt are at risk of liquidation.
Speaking with CNBC’s SquawkStreet on Wednesday, Saylor said that because the Bitcoin position MicroStrategy acquired using debt is properly collateralized, a margin call is not likely. He said:
“On a multi-billion dollar balance sheet, we only have got a $200 million loan that we have to collateralize. And we are 10x over-collateralized on it right now.
If the market traded down by a factor of 10, we’ve got cash and we generate cash flow.
The margin call is much ado about nothing, it’s just made me Twitter-famous. So I appreciate that. And the Twitter trolls love to beat up on me because it gets them engagement.”
#Bitcoin is the only digital scarcity, backed by the world’s most secure computer network, and meets the fundamental need everyone has for a long term Store of Value. My conversation with @davidfaber, @michaelsantoli, & @carlquintanilla on @SquawkStreet. pic.twitter.com/ho7rEaHS1M
— Michael Saylor⚡️ (@saylor) June 15, 2022
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Saylor confirmed that his business intelligence firm’s debt is within control as it was taken out prior to the hike of interest rates.
“As for the company’s balance sheet strategy in general, we borrowed $2.2 billion at a blended interest rate of 1.8% before interest rates doubled,
If you had a chance to grab $2 billion at 1.5% interest, it seems like a reasonable thing to do and I’m glad we did it. Most of it is unsecured debt – $1.7 billion of it is unsecured. The $500 million comes due in seven years after we borrowed the money.
So we feel like we have a fortress balance sheet, we’re comfortable and the margin loan is well managed.”
MicroStrategy currently keeps 129,218 Bitcoin bought at an average price of approximately $30,700, which at current Bitcoin price of $20,566 per coin, account to an unrealized loss of roughly $1.25 billion. Saylor recently said his firm will continue buying more of the flagship cryptocurrency.
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Source: Igaming
