MicroStrategy may be planning to buy additional Bitcoin, which may be valued at up to $1 billion.
The cloud software business filed paperwork with the Securities and Exchange Commission (SEC) today for an Open Market Sale Agreement for a proposed public sale of class A common stock. This form of open-ended contract permits the company to sell stock “as needed” based on its needs.
“The concentration of our bitcoin holdings increases the risks inherent in our bitcoin acquisition strategy,” it adds, adding that “servicing our debt will require a large amount of cash, and we may not have enough cash flow from our business to satisfy our liabilities.”
Of course, any business encounters dangers. MicroStrategy, on the other hand, is experiencing it. Since purchasing its first 21,454 Bitcoins for $11,653 each in August, the cryptocurrency’s price has yo-yoed, rising to $63,498 in April before plummeting to around $33,500 in June.According to Nomics, the price has dropped to roughly $40,000, making MicroStrategy’s initial acquisition a bargain.
However, it warns that any new bout of Bitcoin volatility will drive down the price of its stock, which is becoming increasingly correlated, making it harder for the company to cash out and right the ship in time.
“Our bitcoin holdings are less liquid than our existing cash and cash equivalents, and may not be able to serve as a source of liquidity for us to the same extent,” it stated.