Quick take:
- Michael Saylor has clarified that MicroStrategy can collateralize its $205 million loan from SilverGate bank with its 115,109 Bitcoin holdings
- He also added that Microstrategy could post ‘some other type’ of collateral if Bitcoin fell below $3,562
- There have been a lot of murmurs about Microstrategy getting a margin call on its loan if Bitcoin fell below $21k
- Mr. Saylor had joked about working for McDonald’s as Bitcoin crashed below $32k and $30k
Microstrategy’s CEO, Michael Saylor, has clarified via Twitter that the company’s $205 million loan from Silvergate bank needs to maintain a $410 million collateral. This, in turn, means that the company can pledge its entire Bitcoin holdings of 115,109 BTC, currently worth $4.09 billion, as collateral for the debt.
Furthermore, if the price of Bitcoin falls below $3,562, Microstrategy could ‘post some other collateral.’ Such a scenario would place the company’s Bitcoin holdings at a value of exactly $410 million needed as collateral for the loan. Michael Saylor shared his analysis of the $205 million loan situation through the following tweet.
MicroStrategy has a $205M term loan and needs to maintain $410M as collateral. $MSTR has 115,109 BTC that it can pledge. If the price of #BTC falls below $3,562 the company could post some other collateral. See slides 11-12 in Q1 2022 presentation. #HODLhttps://t.co/9WHsIB6Usx
— Michael Saylor⚡️ (@saylor) May 10, 2022
Talk of Microstrategy Getting Margin Called on the Loan if Bitcoin hit $21k
Mr. Saylor’s comments come on the backdrop of crypto-wide discussions of the company getting a margin call if Bitcoin fell below $21k. The latter number was mentioned by Microstrategy’s CFO, Phong Le, during the company’s most recent earnings call, whereby Mr. Le clarified that the company was ready to contribute more collateral to cover the loan requirements.
Michael Saylor Had Joked About Working at McDonald’s
Furthermore, the clarification on Microstrategy’s situation with the $205 million comes at a time when Bitcoin has been hit hard by a pullback that has seen it drop from $38k to a local low of $29,730 in less than a week. The drop of roughly $21.7% is particularly concerning, given that Microstrategy and Tesla purchased a lot of Bitcoin around this price area back in February 2021.
However, Michael Saylor seems not to be too concerned about the negative price action as he recently joked about working at McDonald’s as Bitcoin fell below the $32k and $30k support levels.