- Michael Saylor said his company anticipated eventual Bitcoin volatility and is ready to “HODL through adversity.”
- MicroStrategy raised a $205 million bitcoin-backed loan from Silvergate Bank in March 2022 and risks taking margin calls if bitcoin falls below $21,000.
- Saylor previously tweeted that the company has 115,109 BTC available as well as other assets that can be pledged as collateral to avoid liquidation.
MicroStrategy, a software analytics firm and Bitcoin’s largest corporate owner, dominated the news Tuesday amid risks of margin pulling on its $205 million Bitcoin-backed loan.
The company’s risk became apparent when Bitcoin briefly fell below the loan’s $21,000 margin call number overnight. However, its CEO took to Twitter to reassure investors that the company is well positioned not to have to sell its bitcoin.
“When MicroStrategy launched a #Bitcoin strategy, it anticipated volatility and structured its balance sheet to remain #HODL against adversity,” says Saylor said.
Saylor quoted and tweeted a previous May 10 announcement that detailed the terms of the loan as well as the company’s plan.
“MicroStrategy has a $205 million term loan and is required to post $410 million as collateral. $MSTR [MicroStrategy] has 115,109 BTC to pawn,” Saylor explained. “If the price of #BTC falls below $3,562, the company could post other collateral.”
Silvergate Bank’s loan requires $410 million in collateral, which the company would not match if the Bitcoin price fell below $21,000 – forcing MicroStrategy to add additional collateral to meet the terms of the transaction comply with the loan.
As Saylor explained, MicroStrategy has enough Bitcoin to pledge as collateral to fund the loan up to a BTC price of $3,562. Should bitcoin fall below this price, the company intends to further collateralize it with other assets.