Software company MicroStrategy has not received any margin calls against its crypto-focused bank loan Silvergate, Reuters reported on Wednesday.
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Aggressive bitcoin investor and US software firm MicroStrategy says it has not received any margin calls against a $ 205 million bitcoin-backed loan it took in March, according to a Reuters report on Wednesday.
A margin call is a situation in which an investor has to commit more funds to avoid losses in a borrowed cash transaction.
CNBC reported on Tuesday that investors were worried that MicroStrategy, which has bet $ 4 billion on bitcoins, would be forced to liquidate some of its holdings in bitcoins if faced with a margin call.
MicroStrategy did not respond to a request for comment from CNBC prior to the publication of this report.
The world’s largest cryptocurrency briefly fell below $ 21,000 on Tuesday in this week’s big sale. Shares of MicroStrategy, considered by some to be an indicator for investing in bitcoins, fell more than 70% since the beginning of the year.
Bitcoin was trading at $ 21,184.99 at 12:52 ET ET on Wednesday.
In March, MicroStrategy borrowed $ 205 million in a three-year loan from crypto-focused bank Silvergate to buy more bitcoins, using its own bitcoins to secure the loan.
As of March 31, MicroStrategy had 129,218 bitcoins, each purchased at an average price of $ 30,700, according to a company document. The company is the largest corporate investor in bitcoins.
The chief financial officer of MicroStrategy previously pointed out in May that if bitcoin fell below $ 21,000, it could trigger a margin call.
“MicroStrategy has not received a ‘margin call’ against our Silvergate loan, although bitcoin prices have fluctuated recently,” the company told Reuters in an email.
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“We can always provide additional bitcoins to maintain the required loan / value ratio … even at current prices, we continue to keep additional bitcoins uncommitted more than enough to meet our requirements under the loan agreement,” MicroStrategy said. . The loan-to-value ratio is a measure of the risk of a loan, when comparing the amount borrowed with the value of the asset.
In early June, MicroStrategy CEO Michael Saylor said the company has more than enough bitcoins to meet its loan requirements. He said bitcoin prices should fall below $ 3,500 before more collateral is required.
Saylor also said in a tweet on Tuesday that the company was anticipating volatility and structured its balance sheet so that it could continue to invest.
MicroStrategy did not immediately respond to a request for comment on Wednesday from CNBC.
– Ryan Browne of CNBC contributed to this report.