What If MicroStrategy Had Bought Ethereum (ETH) Instead of Bitcoin (BTC)?

Calculations suggest that if Michael Saylor’s MicroStrategy had invested in Ethereum (ETH) instead of Bitcoin (BTC), the company would be up $1.4 billion rather than facing a $1.3 billion loss with its current BTC holdings.

MicroStrategy’s $1.3 Billion Loss with Bitcoin (BTC)

MicroStrategy, a key player in Bitcoin’s growth cycle during 2020-2021, invested heavily in BTC under CEO Michael Saylor. The company made its first significant BTC purchase in September 2020 when Bitcoin was priced at just $11,000.

Since then, MicroStrategy has accumulated a total of 130,000 Bitcoin, valued at $2.6 billion at the time of this report. However, with an average purchase price of $30,634 per BTC and Bitcoin currently priced at $20,290, MicroStrategy faces a $1.3 billion loss on its Bitcoin investment.

Historical Bitcoin Purchases by MicroStrategy. Source: Saylor Tracker

In Q2 2022, amidst the LUNA-UST crash, MicroStrategy reported a staggering $918 million loss from its Bitcoin holdings. This was a result of CEO Michael Saylor’s unyielding faith in Bitcoin’s growth prospects, leading to continuous purchases despite a downtrend in the market. In the most recent Q3 2022 report, the company disclosed a $727 million loss due to Bitcoin holdings, attributing it to market volatility, and executed only one small BTC purchase valued at $6 million.

With the company having taken on massive debt to fund its BTC strategy, investors have expressed concerns about MicroStrategy’s direction. Consequently, Michael Saylor announced his resignation as CEO, transitioning to Chairman while affirming his commitment to holding Bitcoin.

Saylor is also known in the crypto community for his “overly optimistic” statements about Bitcoin. In a 2021 interview, when asked about the second-best cryptocurrency after Bitcoin, he declared: “There is no second-best; Bitcoin is the best.” He even encouraged people to increase their Bitcoin holdings, even if it meant mortgaging their homes or selling assets.

Due to his bold declarations, Saylor has become a subject of mockery in the crypto space as Bitcoin’s price continued to decline. Nevertheless, he continues to post “shill” content about Bitcoin on his Twitter feed daily.

MicroStrategy Could Have Profited with Ethereum (ETH)

On November 4th, BlockchainCenter.net created a tool to calculate what would have happened if MicroStrategy had invested in Ethereum instead of Bitcoin.

BlockchainCenter.net asserts that if the entire amount used to purchase BTC had been invested in ETH, MicroStrategy would have realized a $1.4 billion profit instead of the $1.3 billion loss it currently faces—making ETH not just the second-best cryptocurrency but the best, contrary to Saylor’s previous claim.

MicroStrategy’s Asset Value in USD (green), Bitcoin (orange), and Ethereum (blue). Source: BlockchainCenter.net

Specifically, if MicroStrategy had only invested in Ethereum, the company would hold over 3.5 million ETH, valued at $5.4 billion. At ETH’s ATH price in November 2021, this amount would have been worth nearly $16 billion.

At the 2021 peak in November, his portfolio would have been at $16 billion!
— Holger ? (@rohmeo_de) November 3, 2022

Furthermore, if Ethereum had been staked, Saylor’s company could have earned nearly 240,000 additional ETH (worth $370 million), bringing the total to 3.7 million ETH.

Staking would have allowed an investment firm like MicroStrategy to earn passive income from its cryptocurrency holdings instead of letting them sit idle—something Saylor had previously acknowledged and considered for Bitcoin.

Additionally, if Saylor had switched to Ethereum now, he could acquire 1.7 million ETH (assuming no slippage) and earn $132 million annually from staking.

And even if he trades his stack for ETH now and stakes, he still can have 1.7 million ETH and earn $132 million a year from staking.
— Holger ? (@rohmeo_de) November 3, 2022

ETH’s recent deflationary effects from The Merge upgrade, along with a vibrant ecosystem of DeFi, Layer-2 solutions, GameFi, and NFTs, are often cited by Ethereum supporters as reasons why ETH might be a better investment than BTC.

However, for Bitcoin enthusiasts like Saylor and the SEC, Ethereum’s staking model might be seen as having characteristics of a security and requiring registration or regulation. This could be a reason for MicroStrategy to avoid Ethereum to steer clear of potential legal issues.