MicroStrategy Announced Plans to Raise $700M to Fund Bitcoin Purchases
MicroStrategy has increased the amount of its convertible debt offering to $700 million as it pushes for more Bitcoin acquisitions.
The business intelligence firm initially announced plans to offer convertible notes on March 5. At the time, it proposed raising $600 million from the offering, but this amount has since been increased by $100 million.
MicroStrategy Announces Pricing of Offering of Convertible Senior Notes $MSTR https://t.co/GBR4yG4Ebk
- Michael Saylor
(@saylor) March 6, 2024
MicroStrategy intends to use the net proceeds from the sale of the notes to acquire additional Bitcoin and for general corporate purposes," the official statement said.
The convertible notes offering is closing on March 8, 2024, if it meets customary closing conditions. Participants will receive a 0.625% interest per annum, which is payable semi-annually. The notes are set to mature on March 15, 2030.
The offering is dubbed senior notes as the holders will have priority in case MicroStrategy files for bankruptcy or goes into liquidation.
The notes are convertible into MicroStrategy's Class A common stock, cash, or a combination of the two.
MicroStrategy Continues to Buy More BitcoinMicroStrategy is the largest corporate holder of Bitcoin, with the total holdings currently at 193,000 BTC. Last month, the company revealed a recent purchase of 3,000 Bitcoin.
The filing with the US Securities and Exchange Commission (SEC) shows the recent purchase was made between February 15 and February 25. These tokens were purchased at an average price of $51,813 each. The company has purchased its entire Bitcoin holdings for $6.09 billion, bringing the average purchase price for each coin to $31,544.
MicroStrategy has acquired an additional 3,000 BTC for ~$155 million at an average price of $51,813 per #bitcoin. As of 2/25/24, @MicroStrategy now hodls 193,000 $BTC acquired for ~$6.09 billion at an average price of $31,544 per bitcoin. $MSTR https://t.co/micudbYf3P
- Michael Saylor
With Bitcoin's price above $67,000, the unrealized profit on MicroStrategy's Bitcoin stash surpasses $6 billion.
The company has been buying Bitcoin aggressively during both bear and bull markets. The recent convertible notes offering shows that the firm will continue buying despite the price recently hitting an all-time high.
Bitcoin has been on an uptrend over the past month as interest in spot Bitcoin exchange-traded funds (ETFs) grows. The buzz around the upcoming Bitcoin halving event scheduled for next month is also driving the price.
Bitcoin is up 56% over the past month to trade at $67,412 on March 8 at 05:57 EST. MicroStrategy's stock, whose performance mirrors that of Bitcoin, has also been gaining.
MSTR is up by more than 120% over the past month. The stock is trading at yearly highs above $1,300.
Michael Saylor Is Bullish On Bitcoin ETFsMichael Saylor, the executive chairman of MicroStrategy, is bullish on the performance of spot Bitcoin ETFs, which started trading on January 11 following approval by the US securities regulator.
In a recent interview, Saylor opined that Bitcoin ETFs, which are nearing $10 billion in net flows in barely two months, could surpass gold ETFs. These products could compete with the S&P 500 index according to Saylor.
Michael Saylor: #Bitcoin 'Gold Rush' 2024-2034: The era of mass adoption is here.
I had the chance to sit down with @Saylor to discuss the success of the spot Bitcoin ETFs, why our money is toxic, the ideal form of government, building companies on the network and why Bitcoin is... pic.twitter.com/6FPt95hhsG
- Natalie Brunell
The Bitcoin bull has likened Bitcoin ETFs to a universal API" with which investors can trade Bitcoin. He also said the framework offered by ETFs could set the global standard for trading volatile assets and issuing credit.
Before the launch of Bitcoin ETFs, Saylor says getting a loan against the largest cryptocurrency by market capitalization was challenging and attracted high-interest rates. However, these products made it possible for people to use shares as collateral to secure a mortgage using reputable Wall Street giants like JPMorgan and Merrill Lynch.
Besides opening up credit issuance, spot Bitcoin ETFs have also presented a new financial setting. It has increased awareness for institutional investors.
With Bitcoin ETFs driving Bitcoin's price and raising interest in Bitcoin, MicroStrategy will likely continue buying more Bitcoin.
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