MicroStrategy Repays Silvergate Loan, Spends $150M Buying More Bitcoin

A recent filing with the SEC revealed that Microstrategy has conveniently paid off its loan with the failed Silvergate Bank.

By Stacy Elliott

Software firm Microstrategy went all in on Bitcoin. Image: Shutterstock

Software company MicroStrategy, the largest corporate holder of Bitcoin, has fully prepaid the $161 million outstanding balance on its $205 million loan from Silvergate Bank.

By doing so, the company has ended its credit agreement with Silvergate and reclaimed the 34,619 BTC that was being held as collateral against the loan, according to a Securities and Exchange Commission filing.

In the same SEC filing, MicroStrategy also disclosed that between February 16 and March 23, it spent $150 million acquiring 6,455 more BTC.

The software company made headlines last year when it announced the loan agreement because it had secured the loan with Bitcoin so it could buy more Bitcoin. But those were happier times for the world's largest cryptocurrency. At the time, Bitcoin was trading for more than $42,000 and MicroStrategy's 128,687 BTC treasury was worth more than $6 billion.

MicroStrategy and its subsidiaries now own a total of 138,955 BTC. The company says it paid an aggregate price of $4.14 billion to acquire its BTC stash. At today's prices, its holdings are worth $3.8 billion.

Microstrategy and Silvergate

For the past couple of weeks, MicroStrategy has been fielding questions about its obligations to Silvergate.

The bank's parent company, Silvergate Capital, announced on March 8 that it would be voluntarily winding down operations.  Despite disclaimers that MicroStrategy's loan terms would be unchanged by the bank's trouble, MSTR shares, which trade on Nasdaq, took a temporary tumble.

MSTR shares closed at $232.72 on March 8 but had fallen 17% to $192.01 two days later when Silicon Valley Bank announced that it had been placed in receivership by California state banking regulators and sparking fears that a wider banking collapse could be on the horizon.

On Monday morning, after the pre-market announcement MicroStrategy prepaying its Silvergate loan, MSTR shares were trading at $260.21—up 1% from their close last week.

Meanwhile, MicroStrategy founder and chairman and Bitcoin maxi Michael Saylor has been adamantly touting his favorite digital asset and dunking on banks.

Since the shuttering of Silvergate, Silicon Valley Bank, and Signature Bank earlier this month, he's thrice shared a chart on Twitter showing Bitcoin's performance compared to the S&P 500 index, Nasdaq, Gold, Bonds, and Silver.

"Bitcoin is a bank that can't lend out, invest, gamble, dilute, debase, freeze, or seize your assets," he wrote on Twitter. "It works all the time, everywhere in the world, and is unstoppable."