MicroStrategy CEO Saylor Says There’s No Margin Call on Bitcoin Lending

  • MicroStrategy CEO Michael Saylor told Bloomberg on Tuesday that there is no margin call on his bitcoin-backed loan.
  • “As long as the Silvergate loan remains secured by an LTV of less than 50%, there is no margin call,” Saylor wrote via email.
  • MicroStrategy’s loan was in focus as the price of bitcoin fell closer to $21,000.

MicroStrategy investors shouldn’t worry about a potential margin call on its bitcoin-backed loan because the software maker has plenty of collateral to pledge if needed, CEO Michael Saylor told Bloomberg on Tuesday.

“As long as the Silvergate loan remains secured by an LTV of less than 50%, there is no margin call,” Saylor wrote in an email to Bloomberg, referring to the loan-to-collateral value ratio. “We are managing accordingly.”

MicroStrategy’s stock rose more than 3% during Tuesday’s session after Monday’s 25% drop on fears of a margin call as bitcoin tumbled.

The recent selloff in Bitcoin pushed the price of the cryptocurrency towards $21,000. In May, the company said bitcoin would need to fall to around that price before a margin call was triggered on its $205 million loan from a unit of Silvergate Bank. MicroStrategy could contribute more to the warranty package so that it never gets there, according to the report.

Bitcoin was trading at $22,284.76 on Tuesday, reducing losses to 1%. MicroStrategy took on debt to buy bitcoin at higher prices. It has nearly 130,000 bitcoins on its balance sheet, buying them at an average price of $30,700 over the past two years.

“When @MicroStrategy adopted a #Bitcoins Strategy, he anticipated


volatility

and structured its balance sheet in order to continue to #HODL through adversity, Saylor wrote in a Tuesday post to his 2.5 million Twitter followers.

Bitcoin fell alongside stocks on broader investor concerns about rising interest rates and slowing economic growth, pushing the value of the cryptocurrency market below $1 trillion. .

MicroStrategy shares are down about 70% this year. Silvergate Bank’s parent company is Silvergate Capital. Its shares rose nearly 4% on Tuesday but lost more than 50% in 2022.