MicroStrategy, a business services company based in Virginia, made history this week when it became the first public company to ostensibly purchase bitcoin as an investment. As the BTC Times reported, the company scooped up 21,454 bitcoin with $250 million USD from their balance sheet.
The move was hailed as one of the most important events for Bitcoin in its storied history. Public disclosures indicate, however, that there are more positive nuances to MicroStrategy's surprising bitcoin acquisition.
There's More to MicroStrategy's Bitcoin Acquisition than Meets the Eye
On August 11th, the Nasdaq-listed MicroStrategy made waves in financial circles when it revealed it had deployed $250 million USD of its cash reserves into spot bitcoin. Chief executive Michael Saylor pulled no punches promoting Bitcoin in the press release announcing the move.
"This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash."
With a market capitalization of approximately $1.3 billion USD, $250 million USD worth of bitcoin on MicroStrategy's balance sheet effectively makes the company's shares (MSTR) a proxy investment in bitcoin.
Swan Bitcoin, a Bitcoin-only exchange, made reference to this when it revealed that BlackRock and Vanguard both have a large stake in MicroStrategy. According to public disclosure data compiled by CNN Business, BlackRock owns 16.97% of the company, while Vanguard owns 11.72%.
What makes this especially notable, Swan Bitcoin explained, is that BlackRock and Vanguard did not veto Saylor's decision to buy bitcoin, which they could have done given the influence they wield over the company:
BlackRock is the largest asset manager in the world. Vanguard is the largest provider of mutual funds in the world. Together they own over 25% of MicroStrategy. They likely had prior notice. If so, these two financial behemoths just essentially approved a massive $BTC buy.
Not only did Vanguard and BlackRock indirectly gain exposure to Bitcoin, but so did hundreds of thousands, if not millions of investors.
Public disclosure data indicates that a large percentage of the outstanding MSTR shares are held by popular mutual funds and pension funds. Notable funds holding MSTR shares — and bitcoin by extension — include two multi-billion dollar pension plans in Canada, Vanguard's popular Total Stock Market Index Fund, and iShares' Russell 2000 ETF.
With MicroStrategy’s bold move, Bitcoin succeeding will be in the best interest of hundreds of thousands of investors, whether they planned it or not.