MicroStrategy Didn’t Get a Margin Call on $205M Bitcoin-Backed Loan: Company Confirms

MicroStrategy refuted rumors that it had received a margin call against its $205-million bitcoin-backed loan from Silvergate Capital, although BTC dipped below the company’s liquidation price of $21,000.

• The NASDAQ-listed business intelligence giant started accumulating massive portions of bitcoin nearly two years ago. Since then, it has bought nearly 130,000 BTC. Some purchases came from excess cash, while others were executed following convertible note offerings.
• In late March, the company made history by taking a $205 million term loan from Silvegate Bank, collateralized by its own BTC holdings. The firm used the funds to purchase even more bitcoins.
• However, this came at a time when the cryptocurrency was riding high at almost $50,000. Since then, the asset has lost more than 50% of its value in just a few months, which jeopardized MicroStrategy’s loan and raised the risks of a liquidation.
• Back in May, when BTC had already dropped to around $30,000, the company’s CEO and founder – Michael Saylor – said the loan required maintenance collateral worth $410 million to stay active (twice the size of the original loan).
• Moreover, he noted that the collateral MicroStrategy had pledged was enough to keep the position safe until BTC’s price drops to $21,062 – something that seemed unlikely in late March but happened this week.
• A Reuters report from June 15 cited a company statement denying receiving a margin call against the Silvergate loan “even as bitcoin prices have fluctuated recently.”

“We can always contribute additional bitcoins to maintain the required loan-to-value ratio. Even at current prices, we continue to maintain more than sufficient additional unpledged bitcoins to meet our requirements under the loan agreement.”