MicroStrategy has Earned More from Bitcoin than its Actual Business

MicroStrategy has Earned More from Bitcoin than its Actual Business

It didn’t take long for MicroStrategy to become renowned in the crypto industry, after it committed hundreds of millions to the leading crypto, Bitcoin. It appears that the decision is paying off for the company because it has reaped a lot of benefits from it so far. Earlier this week, the financial results were published by the cloud-based business intelligence business solutions provider for the third quarter of 2020. The firm reported strong fundamentals, which were backed in a major way by its decision to move onto the Bitcoin standard. Michael Saylor, the chief executive of the company, said that these results were some of the best ones in a decade. 

According to forecasts by Wall Street analysts, earnings per share of $0.04 had been expected, but the company surpassed expectations by reporting earnings per share of $2.06. The core business of the company also underwent significant growth, as there was an increase in product licenses and deferred subscriptions revenue. The same was also applicable on the company’s non-GAAP operating margin. As expected, MicroStrategy’s decision to switch its reserve to pioneer crypto Bitcoin was the elephant in the room, a decision it had announced in August. 

The company had announced that it was spending $250 million to buy 21,454 BTC. Only days later, Saylor tweeted that the firm had doubled down and purchased 17,000 tokens, which had brought about their total Bitcoin investment to $425 million. While the Bitcoin investment did result in an impairment loss of $44.2 million for the company, it appears that the fourth quarter is already off to a hot start. Last week, there was a significant increase in Bitcoin’s price, which shot up after the announcement by prominent payment processor PayPal of integrating crypto services in its core business from next year onwards.

Currently, Bitcoin has crossed the $13,000 mark. Considering that the crypto had been worth $11,500 when MicroStrategy had moved its reserves, it appears to have rebounded quite well and now, it is in the black. Saylor explained in a statement that Bitcoin is part of its aim to deliver long-term value to the company’s investors. He said that the purchase of Bitcoin provides the possibility of a greater return, instead of keeping these balances in cash. When it comes to Bitcoin, the CEO has always had a pragmatic approach. Last month, he said that he always knew the long-term potential of the asset.

Even though he is not a Bitcoin bull, he just wants to capitalize on it. The chief executive also shrugged off volatility concerns and explained that they could liquidate their Bitcoin holdings at any point if they thought it was on shaky ground. Given how Bitcoin is currently performing in the market, it seems rather unlikely that the company will think about liquidating any time soon. As of now, MicroStrategy seems to have made more profit from Bitcoin than it has done from its core business in the last three years. Since 2017, the core business had earned the company only $78 million, but it has now exceeded $525 million thanks to Bitcoin.

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