MicroStrategy Pauses Bitcoin Buying Streak After 12 Consecutive Weeks

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  • MicroStrategy halted its 12-week Bitcoin buying streak amid ongoing capital-raising plans.
  • Saylor’s voting power fell below 50% as share issuances reshaped MicroStrategy’s governance.
  • MicroStrategy faces tax and legal scrutiny, with new regulations impacting its financial outlook.

MicroStrategy Inc. paused its weekly Bitcoin purchases last week, ending a streak of 12 consecutive weeks of acquisitions that began in late October.

Per Bloomberg, the halt followed an extended rally in the crypto market, which had been bolstered by policy shifts under Donald Trump’s administration.

The Virginia-based software firm, which has transformed into a leveraged Bitcoin investment entity, had acquired more than $20 Billion in Bitcoin during the buying spree.

This brought its total holdings to approximately $44.7 Billion, representing more than 2% of the total Bitcoin supply.

MicroStrategy’s Capital Raising Strategy

The company, led by Michael Saylor, continues its efforts to secure additional funding to expand its Bitcoin holdings. It plans to raise $42 Billion in capital through 2027.

Recently, MicroStrategy sold $563 Million of perpetual strike preferred stock while also utilizing at-the-market stock sales and convertible debt offerings to generate funds.

Hedge funds have played a role in the demand for MicroStrategy’s securities. Many have employed convertible arbitrage strategies by purchasing the company’s bonds while shorting its stock, betting on price fluctuations.

Meanwhile, MicroStrategy’s stock has surged over 2,200% since the end of 2022, reflecting the market’s response to its Bitcoin investment approach.

Saylor had previously indicated that the company would shift focus toward fixed-income securities in early 2025, a strategy that may influence future capital allocation.

Tax Obligations and Regulatory Concerns

Meanwhile, per The Wall Street Journal, MicroStrategy may face significant tax liabilities stemming from its unrealized Bitcoin gains, which exceed $19.3 Billion.

The Inflation Reduction Act of 2022 introduced a corporate alternative minimum tax, subjecting companies to a 15% tax rate based on adjusted earnings.

Given its substantial holdings and the increasing value of Bitcoin, the firm could be required to pay federal income taxes despite not having sold any of its cryptocurrency assets.

A report from The Wall Street Journal on January 24, 2025, highlighted the potential financial impact of these tax obligations.

The tax structure, designed to target profitable corporations, could significantly affect MicroStrategy’s financial standing.

Meanwhile, regulatory scrutiny remains a concern, adding complexity to the company’s long-term Bitcoin investment strategy.

Legal Challenges and Bitcoin Price

Beyond taxation issues, MicroStrategy has navigated legal challenges in recent years. In June 2024, the company settled a tax fraud lawsuit for $40 Million, The New York Times reported.

The case, brought by the District of Columbia, alleged that MicroStrategy failed to pay income taxes during the decade that Saylor resided there.

The settlement ended the dispute, but it underscored the regulatory and legal scrutiny surrounding the company’s operations.

Ultimately, the company has been more aggressive in issuing capital for Bitcoin purchases than initially projected during its third-quarter earnings call.

Observers are now evaluating whether the firm will revise its plans or maintain its current trajectory. Notably, Bitcoin price has rebounded to $99,691 after a market wide dump pushed its price below $92,000 level.

MicroStrategy
Source: CoinGecko

Saylor’s Voting Power Below 50%

In related news, Michael Saylor, who once held the majority of voting control over the company, no longer maintains that level of influence by November 2024. Despite being the largest shareholder, his voting power fell below the 50% threshold.

This shift stems from the company’s aggressive fundraising initiatives and its commitment to acquiring Bitcoin, which has significantly altered its corporate governance structure.

A key factor in this change is the increasing number of Class A shares surpassing Class B shares, ultimately reducing Saylor’s authority within the organization.

Disclaimer

In this article, the views, and opinions stated by the author, or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.

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