RE: Pluto going public3 Jun 2022 11:07
So mstr cfo says 21k starts a 205 million margin call, saylor says 3562 mmmm
The margin call from hell
MicroStrategyâs CFO Phong Le explained in the companyâs first-quarter earnings call on Tuesday that if Bitcoinâs price falls below $21,000, or around 50% from current levels, it will be forced to pony up more cryptocurrency to back its $205 million Bitcoin-collateralized loan with Silvergate Bank that was used to buy Bitcoin in the first place.
âWe took out the loan at a 25% LTV; the margin call occurs at 50% LTV,â Le said. âSo essentially, Bitcoin needs to cut in half, or around $21,000, before weâd have a margin call.â
The CFO noted that MicroStrategy still holds âquite a bitâ of uncollateralized Bitcoin that it could use to answer any potential margin call, however.
âAs you can see, we mentioned previously we have quite a bit of uncollateralized Bitcoin,â Le said. âSo we have more that we could contribute in the case that we have a lot of downward volatility. But again, we're talking about $21,000 before we get to a point where there needs to be more margin or more collateral contributors. So I think we're in a pretty comfortable place where we are right now.â
Still, taking out a loan collateralized by Bitcoin to buy more Bitcoin is a risky game. If the worldâs leading cryptocurrency falls and a margin call goes through, MicroStrategy would be put in a tough spot. MicroStrategy did not respond to Fortuneâs request for comment.
https://fortune.com/2022/05/04/michael-saylor-microstrategy-margin-call-bitcoin/