MicroStrategy tops Tesla in corporate bitcoin assets

New data show major holdings, as bitcoin falls on Friday amid speculation that the US would raise capital gains taxes, curbing investment in digital cryptocurrencies

MicroStrategy tops Tesla in corporate bitcoin assets
Tesla chief executive Elon Musk and Grace Tao, the company's vice president for external relations, attend a delivery ceremony for the electric vehicle maker's China-made Model 3 cars in Shanghai in 2020. File photo by Reuters. 

(ATF) While Tesla's purchase of $1.5 billion worth of bitcoins hit headlines earlier this year, the US electric carmaker is far from the biggest corporate holder of the cryptocurrency, data released this week show.

US business intelligence provider MicroStrategy has more than $5 billion in bitcoin assets, well ahead of Tesla.

The data comes as bitcoin fell on Friday amid speculation that US President Joe Biden would raise capital gains taxes, curbing investment in digital assets.

The cryptocurrency was trading at $49,692.87 around noon Hong Kong time on Friday, a fall of 7.45% over the previous 24 hours, according to Coindesk.

The drops came after Biden Administration officials on Thursday revealed a raft of proposed changes to the US tax code, including a plan to nearly double taxes on capital gains to 39.6% for people earning more than $1 million.

STORE OF VALUE

MicroStrategy spent over $2.2 billion to acquire 91,579 bitcoins, which are now worth more than $5 billion, according to the company's financial report in March.

“The company remains focused on our two corporate strategies of growing our enterprise analytics software business and acquiring and holding bitcoin,” Michael Saylor, MicroStrategy chief executive said.

“MicroStrategy now holds over 90,000 bitcoins, reaffirming our belief that bitcoin, as the world’s most widely-adopted cryptocurrency, can serve as a dependable store of value."

"That means the company doubled its investment in less than a year," Swedish cryptocurrency data provider AksjeBloggen said in a report.

"The downside is that, unlike Tesla, MicroStrategy used more than $1.6 billion in convertible debt to finance them," the report added.

FORM OF PAYMENT

Saylor defended the move, saying: "We will continue to pursue our strategy of acquiring bitcoin with excess cash and we may from time to time, subject to market conditions, issue debt or equity securities in capital raising transactions with the objective of using the proceeds to purchase additional bitcoin.” 

In February, Tesla, the world's sixth most valuable company, announced it had purchased $1.5 billion worth of bitcoin for its balance sheet and that it would soon be accepting the cryptocurrency as a form of payment.

Tesla ended 2020 with close to $19.4 billion in cash and cash equivalents, meaning it invested less than 8% of its available capital in bitcoin. As of last week, the value of the company's bitcoin holdings jumped 75% to $2.6 billion.

Since the beginning of 2020, bitcoin's price surged by 725%, reaching all-time highs above $64,000 last week, although it has fallen since.

One of the drivers for such growth was a wave of big companies rushing to invest in the world's leading cryptocurrency.

OUTDOING THE S&P

After Tesla announced its $1.5 billion purchase, the cryptocurrency's price rose from $39,400 to $48,000 in less than 24 hours.

The next biggest holdings are owned by Square. The US digital payments company recently spent $200 million to buy 8,027 bitcoins and now holds almost half a billion dollars in bitcoin assets.

Since April 2016, bitcoin's price surged by a staggering 14,000%, which is 110 times better than the total return of the S&P 500 in the five-year period.

With big companies rushing to invest significant amounts of money into the world's leading cryptocurrency, bitcoin's price is expected to continue rising.

The maximum amount of bitcoins that can ever exist is 21 million. As of April, there were just over 2.3 million bitcoins left to be mined.

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