Michael Saylor Defends Bitcoin-Backed Loan

Key Takeaways

  • Michael Saylor wrote on Twitter right now that MicroStrategy might simply provide extra Bitcoin to cowl the required collateral within the occasion of a margin name.
  • MicroStrategy has borrowed $205 million from Silvergate Financial institution with Bitcoin as collateral.
  • Saylor wrote that Bitcoin must fall beneath $4,000 earlier than the corporate would wish any different collateral.

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Michael Saylor has weighed in on issues that his firm’s Bitcoin-backed mortgage from Silvergate could possibly be margin referred to as by stating his willingness to place up much more Bitcoin to take care of its place. By Saylor’s math, Bitcoin must drop beneath $4,000 earlier than the corporate would wish different collateral within the occasion of a margin name.

Saylor Backs Bitcoin-Backed Debt

The MicroStrategy CEO is defending his firm’s controversial Bitcoin-backed mortgage place.

In a tweet this morning, Michael Saylor addressed issues over the potential of a margin name on MicroStrategy’s hefty, Bitcoin-backed mortgage from Silvergate Financial institution.

Saylor wrote that the corporate had a further 115,109 BTC that it might pledge to take care of the required $410 million in collateral on its $205 million mortgage if wanted. He additionally wrote that Bitcoin’s value must fall to $3,562 earlier than the corporate would wish to submit different collateral.

Final March, MacroStrategy, a fully-owned subsidiary of MicroStrategy, took out a $205 million mortgage from Silvergate Financial institution to purchase extra Bitcoin. Traders raised questions over the mortgage throughout MicroStrategy’s Q1 earnings name final week, significantly over the potential of a margin name.

Phong Le, the chief monetary officer of MicroStrategy, stated that the corporate would solely face a margin name if Bitcoin fell to $21,000. Nonetheless, Le emphasised that the corporate might add collateral (within the type of Bitcoin) to the mortgage to be able to keep away from being compelled into promoting its Bitcoin at a loss. MicroStrategy holds 129,200 Bitcoin, however its Silvergate mortgage solely makes use of round 19,466 Bitcoin for collateral. 

Saylor has insisted that his firm has no plans to promote its Bitcoin.

Disclosure: On the time of writing, the creator of this piece owned BTC, ETH, and a number of other different cryptocurrencies. 

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