key takeaways
- Michael Sayer wrote on Twitter today that Microstrategy could easily supply more bitcoin to cover the collateral needed in the event of a margin call.
- MicroStrategy has borrowed $205 million in bitcoin from Silvergate Bank as collateral.
- Sayer wrote that bitcoin would have to drop below $4,000 before the company would require any alternative collateral.
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Michael Sayer has weighed in on concerns that his company’s bitcoin-backed loan from Silvergate may be called margin, stating his desire to put in even more bitcoin to maintain his position. According to Saler’s math, bitcoin would have to drop below $4,000 before the company would need other collateral in the event of a margin call.
Seller Back Bitcoin-Backed Loans
The CEO of Microstrategy is defending his company’s controversial bitcoin-backed debt position.
one in Tweet This morning, Michael Sayer addressed concerns over the prospect of a margin call on Microstrategy’s massive, bitcoin-backed loan from Silvergate Bank.
Saylor wrote that the company has an additional 115,109 BTC that it can pledge to keep the required $410 million in collateral on its $205 million loan if needed. He also wrote that the price of bitcoin would have to drop to $3,562 before the company would be required to post other collateral.
Last March, MicroStrategy’s wholly owned subsidiary, MacroStrategy, took out a $205 million loan from Silvergate Bank to buy more bitcoin. Investors raised questions over the debt, particularly the prospect of a margin call, during MicroStrategy’s Q1 earnings call last week.
Microstrategy’s Chief Financial Officer Fong Le, Said said the company would only face a margin call if bitcoin fell to $21,000. However, Lay emphasized that the company could add collateral (in the form of bitcoin) to the loan to avoid being forced to sell its bitcoins at a loss. MicroStrategy holds 129,200 bitcoins, but its Silvergate loan uses only 19,466 bitcoins as collateral.
Sayer stressed that his company has no plans to sell bitcoin.
Disclosure: At the time of writing, the author of this article owns BTC, ETH, and several other cryptocurrencies.