related posts
50 sats \ 1 reply \ @TheBTCManual 2 Nov 2023
If MSTR manages to maintain its cash flow and service their loans this strategy could go down in history as one of the greatest, while I think they are playing it quite close to the chest and there's no need to be as aggressive considering how much they've already acquired, they are playing the game of stacking on the next level
If Bitcoin does have another run up, their stocks become attractive, they can sell that stock at a multiple to cover their fiat loans along with their usual cash flow from operations, bar something crazy happening, I think MSTR will hit 200k BTC
reply
0 sats \ 0 replies \ @343pg 2 Nov 2023
Definitely agree. For info, I wrote the article below looking at the exact nature of each tranche of debt.
At the time it didn't look great for them but they still had plenty of time - the main danger was rolling over each other tranche of debt and ideally not selling bitcoin at a loss if they were unable to do so (or the new borrowing terms could have been really punishing).
I think we now have our answer though since - they are able to simply issue new equity and could in theory use this to pay off debt. Or buy even more bitcoin...
https://bitcoinmagazine.com/business/whats-next-for-microstrategy-bitcoin
reply
0 sats \ 0 replies \ @JesseJames 2 Nov 2023
Holy smokes, that $5.6 B if I do the math right. That is massive and they didn't even go crazy, just a tad aggressive. I would say that was the right call..lol. Can't imagine them next year when BTC cracks 100K or better... wow
reply
0 sats \ 7 replies \ @elvismercury 1 Nov 2023
I've read analyses about what MSTR needs to happen from a btc price perspective to stay out of trouble and meet their various loan obligations. Anyone have a link handy? If I remember right, it was a bit precarious for a while. Are they out of the woods at $35k?
reply
380 sats \ 0 replies \ @orthwyrm 2 Nov 2023
I think so...
-
They no longer have any loans with BTC acting as collateral (the $200M loan from Silvergate was repaid at a discount).
-
As of now their average cost basis is $29.5k / BTC, and they are currently sitting on $900M profit (which is x7 their annual revenue).
I'm not seeing any major risk factors. Some people are speculating that the stock will take a hit if ETFs are approved. I could see it losing a premium of sorts, but I'm not sure that will impair their ability to service the debt. They still have the software business and a shit load of corn.
reply
0 sats \ 5 replies \ @SpaceHodler 2 Nov 2023
I vaguely remember reading the price would have to go below $4k for them to get liquidated.
reply
0 sats \ 4 replies \ @elvismercury 2 Nov 2023
Holy shit, that low? I thought it was much higher than that, like at $15k they were in deep shit. Maybe someone has a link to whatever the analysis I'm thinking of is...
reply
314 sats \ 3 replies \ @ek 2 Nov 2023
Here is an article from the Bitcoin Magazine about this
reply
0 sats \ 2 replies \ @SpaceHodler 2 Nov 2023
A margin call is a forced sale, so I'm not sure what the last sentence means.
Maybe it's that the terms of the loan are flexible enough that if it wicks below that level briefly they won't get liquidated.
reply
152 sats \ 1 reply \ @ek 2 Nov 2023
Read the article, it continues with this:
reply
152 sats \ 0 replies \ @343pg 2 Nov 2023
Yes that was on the silvergate loan in any case, which they have since paid off entirely. It was always noise as they could have posted yet more collatoral, though it wouldn't have been good at that low $3k level.
The main risks really were (and still are) refinancing when each of the loans becomes due for repayment. I tried to break this down in the article below -
https://bitcoinmagazine.com/business/whats-next-for-microstrategy-bitcoin
reply
0 sats \ 0 replies \ @kr 1 Nov 2023
thanks for sharing the direct link!
reply