As a seasoned crypto investor with a keen interest in MicroStrategy’s Bitcoin acquisitions, I find this latest announcement an exciting development. MicroStrategy’s decision to sell convertible senior notes to fund further Bitcoin purchases is a testament to their strong belief in the digital asset as a dependable store of value and an attractive investment asset.
MicroStrategy, a business intelligence firm, plans to raise $500 million by selling convertible senior notes. The funds will be used to expand its existing Bitcoin holdings. This action intends to strengthen MicroStrategy’s significant Bitcoin investment.
MicroStrategy announced on Thursday that we’re planning to issue notes with maturity in 2032 through a private sale to institutional investors who meet specific qualifications, in compliance with Rule 144A of the Securities Act of 1933.
Conditional Offering
MicroStrategy cautioned that the proposed transaction is contingent upon various factors, including market conditions. Consequently, it cannot assure when, if ever, this deal will be finalized or what its specifics will be.
The firm intends to offer initial buyers the chance to acquire an extra $75 million worth of notes during a 13-day timeframe, starting from the original issuance date.
The business intelligence company reported that MicroStrategy’s notes will be unsecured senior debts, which come with a semi-annual interest rate payable on June 15 and December 15, starting from December 15, 2024. These notes will mature on June 15, 2032, unless they are bought back, redeemed, or transformed beforehand.
Purpose of the Sale
As a crypto investor, I would interpret this statement as follows: If MicroStrategy’s proposal is accepted, I understand that they plan to utilize the majority of the raised funds for buying additional Bitcoin, with some remaining for various corporate expenses.
In August 2020, MicroStrategy became an early adopter among publicly traded companies by initiating investments in Bitcoin as a protective measure against inflation. This move marked a shift from holding cash as a reserve asset for the company. According to Michael Saylor, then-CEO of MicroStrategy, the motivation behind this strategic move stemmed from their conviction that Bitcoin possesses strong value preservation capabilities.
“He expressed confidence in Bitcoin being the leading cryptocurrency with widespread acceptance and stated that it presents a reliable form of value storage and an enticing opportunity for future growth, surpassing the returns of keeping money in cash.”
MicroStrategy has amassed the most Bitcoin among corporations since it began purchasing the cryptocurrency. As of May 1, 2024, the company holds roughly 214,400 Bitcoins, which is equivalent to approximately $7.5 billion based on the value following its April buy.
The Bitcoins in these assets were acquired at various points in time, with an average cost of $35,158 for each Bitcoin.
The majority of the company’s Bitcoin acquisitions came about through selling its own shares. However, in the year 2022, it was disclosed that MacroStrategy, a subsidiary of our firm, obtained a $205 million loan from Silvergate Bank to expand its Bitcoin holdings. MacroStrategy and Silvergate reached an agreement to utilize Bitcoin as collateral for this transaction. This action underscored the company’s strong stance and confidence in the foremost cryptocurrency.
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2024-06-13 18:24