Bitcoin bounced back on Friday, sending some stocks higher. Technology company MicroStrategy (NASDAQ: MSTR) holds thousands of bitcoin tokens on its balance sheet (and still buys more), which is why its stock was up. And bitcoin mining stocks like Marathon Patent Group (NASDAQ: MARA) a Blockchain riot (NASDAQ: RIOT) also going up today, reversing some declines in the past week.
At 3 pm EST on Friday, MicroStrategy stock was up 10%, Marathon was up 6%, and Blockchain Riots were up 8%. Cryptocurrencies do not have market hours (they trade all day, every day), so it’s best to measure their returns over rolling 24-hour periods. According to cryptocurrency news website CoinDesk, the price of bitcoin had risen 3% over the last 24 hours. But its price has risen roughly 15% from Thursday’s lows.
According to a filing today with the Securities and Exchange Commission, MicroStrategy has been buying more bitcoin. The company purchased another 314 tickets for approximately $ 10 million, in compliance with its new balance sheet policy. According to the policy, any cash not needed for running the business is held in bitcoin.
This brings MicroStrategy’s total holdings to 70,784 bitcoin tokens. For the current price (about $ 33,700 as of this writing), that puts the value almost $ 2.4 billion. Given the company’s market capitalization of less than $ 5.4 billion, it’s no wonder that this stock is as volatile as bitcoin these days: Bitcoin has about 44% of its value.
For its part, Marathon had no news today, though its stock continues to see heavy trading volumes. Riot Blockchain filed with the SEC today. In the filing, the company set out its payment schedule and delivery timeline for new mining equipment, in line with its Dec. 18 agreement with Bitmain Technologies. In short, he expects to receive thousands of new Antminers over the next few months alone from this deal.
Yesterday, I noted how Riot Blockchain is increasing its mining power to keep pace with the growing hashrate of the bitcoin blockchain network. The amount of bitcoin received for mining is proportional to the amount each player contributes to the overall hashrate. As more miners jump in and others increase their power, companies like Riot Blockchain and Marathon must continue to spend on beef up their mining operations.
For MicroStrategy, Marathon, and Riot Blockchain, bitcoin prices are likely to greatly influence shareholders’ long-term earnings. And in terms of bitcoin’s long-term outlook, MicroStrategy CEO Michael Saylor is clearly unmatched. Why else would his company hold thousands of bitcoin tokens? Today, Saylor appeared on CNBC’s Power Lunch to talk about.
As for the new Biden administration, Saylor believes it will eventually address legal ambiguities in cryptocurrencies. Once resolved, this could ignite a wave of institutional buyers in assets such as bitcoin. Here’s Saylor’s long-term vision: He hopes many companies will do what MicroStrategy has done and hold bitcoin in place of cash. To that end, he is hosting a conference in February called Bitcoin for Corporations, where he will share everything MicroStrategy had to openly consider as a public company holding bitcoin.
If more companies do what MicroStrategy does, demand for bitcoin will likely outweigh its current estimated supply of 900 new tokens per day. This could cause the price of bitcoin to hold up (incidentally, good for MicroStrategy shareholders).
For now, though, it’s still pretty speculative. Indeed, we do not know which companies will be attending the conference or what they will decide afterwards. But it may be something that investors will hear more about when MicroStrategy gives its quarterly earnings update on January 28.