MicroStrategy, the largest business holder of Bitcoin, plans to raise $1.75 billion through a new offering of senior convertible notes with a 0% interest rate. This novel finance strategy enables the corporation to acquire additional Bitcoin while avoiding the strain of paying monthly interest to bondholders. We will use the profits from this sale to buy more Bitcoin and fulfill other corporate requirements.
We will sell the senior convertible notes at a discount, with a scheduled maturity date of 2029. We will redeem the notes for face value if we don’t convert them before their maturity date. Furthermore, these notes have seniority over common stock, implying that bondholders will have priority if the company declares bankruptcy or liquidation.
Given the current Bitcoin pricing, MicroStrategy could potentially acquire an additional 19,065 BTC with the $1.75 billion in funding. This is part of the company’s continued effort to expand its Bitcoin reserves, which have already topped 331,000 BTC, totaling more than $30 billion. In reality, MicroStrategy has purchased 142,000 BTC so far in 2024, totaling nearly $12.8 billion.
MicroStrategy’s smart Bitcoin investments have paid off, with the company’s holdings increasing dramatically. It has earned a 133% return on its Bitcoin investments, purchasing the cryptocurrency at an average price of $39,292 per Bitcoin. Despite recent fluctuations in Bitcoin’s price, which peaked at $93,477, the corporation remains committed to growing its holdings.
In addition to the initial $1.75 billion sale, MicroStrategy announced ambitions to raise $42 billion over the next three years to expand its Bitcoin acquisition strategy under its “21/21” plan. This ambitious scheme involves both equity and fixed-income securities.
MicroStrategy’s daring Bitcoin acquisition strategy has not only increased its holdings but has also had an impact on broader market patterns as other institutional investors take note of its approach to crypto as a reserve asset.
