US software company acquires $250 million in Bitcoin, shares rise 10%

Nasdaq-listed U.S. enterprise software company Microstrategy said it had bought more than $250 million of bitcoin this year , an announcement that sent its shares up 10%.
Bitcoin is a “treasury reserve” asset
Data released by Microstrategy on Tuesday showed that Bitcoin is now a cornerstone of financial strategy for the next few years, especially as the United States struggles with the ill effects of the coronavirus pandemic and the risk of inflation.
The firm said bitcoin’s “unique properties” led it to believe that investments in cryptocurrencies not only provided a reasonable hedge against inflation, but also held the promise of higher rates of return than other investments.
In total, the company acquired more than 21,454 bitcoins for a total purchase price of $250 million (including fees and expenses). Meanwhile, MicroStrategy's CEO Michael J. Saylor noted that the company's investment in Bitcoin is part of its new capital allocation strategy to maximize shareholder value.
But he noted that the decision to buy Bitcoin was not made overnight. Instead, the company "spent months" determining capital allocation and cited huge economic factors, such as excessive money printing and a grim economic outlook, as the main factors behind its decision.
He added that Bitcoin has become an important part of the global financial system, with characteristics that are useful to both individuals and institutions. This makes it a "legitimate investment asset" for MicroStategy and a principal in its treasury reserves moving forward.
'Brand' and stock jump
Saylor offered a view that alleged global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technological utility and Bitcoin’s community spirit are factors behind Bitcoin’s “superiority as an asset class for those seeking a long-term store of value.”
He noted that Bitcoin is “digital gold” that is “harder, stronger, faster and smarter” than any currency that came before it. Saylor further expects its value to rise as technology improves, adoption expands and network effects grow, the same effects that have fueled the rise of so many modern-day killers.
Meanwhile, the news caused MicroStrategy shares to rise by more than 10%. Twitter commentators said the money was worth more than $250 million, enough to cover the company's investment in Bitcoin.
Ripple CEO Brad Garlinghouse called the move "bold and brilliant" in a tweet.
At the same time, MicroStrategy strongly announced its announcement, "We believe that these and other factors, taken together, could have a significant depreciating effect on the long-term real value of fiat currencies and many other conventional assets, including many assets traditionally held as part of corporate treasury operations." (NetEase)