Business Intelligence firm MicroStrategy has confirmed that it did not get a margin call on a $205M Bitcoin-backed loan.
As per reports, the firm responded, “We can always contribute additional bitcoins to maintain the required loan-to-value ratio… even at current prices, we continue to maintain more than sufficient additional unpledged bitcoins to meet our requirements under the loan agreement.”
The firm, thus put a full stop on rumours that it had received a margin call against its $205-million bitcoin-backed loan from Silvergate Capital, even when Bitcoin fell below the firm’s liquidation price of $21,000.
On this, CEO Michael Saylor tweeted that when MicroStrategy adopted a #Bitcoin Strategy, it had expected volatility and structured its balance sheet so that the firm could continue to Hodl even through adversity.
MicroStrategy started Hodling bitcoins nearly two years ago. Since then, it has bought roughly 130,000 BTC. Some of the purchases were made from excess cash, on the other hand, others purchases were done after convertible note offerings.
In late March, the company’s subsidiary MacroStrategy secured a $205 million term loan from Silvergate Bank, by collateralizing its own BTC holdings. The loan funds were used to purchase even more bitcoins.
But, the loan was secured at a time when the cryptocurrency was stable and the prices were as high as almost $50,000. Since then, Bitcoin has lost more than 50% of its value in a matter of a few months. The market crash has thus threatened MicroStrategy’s loan and raised the risk of a liquidation.
In May, even when Bitcoin‘s value dropped to around $30,000, CEO Michael Saylor said in a tweet that the loan needed maintenance collateral worth $410 million to stay active.
Additionally, he said that the collateral MicroStrategy had promised was sufficient to keep the position safe until BTC’s price dropped to $21,062.
Also read: Michael Saylor’s MicroStrategy Down $1B on its Bitcoin Holdings
