MicroStrategy Raising $400 Million To Buy More Bitcoin
MicroStrategy has announced a securities offering so it can raise $400 million to buy more Bitcoin (BTC).
The business intelligence firm is doubling-down on its initial Bitcoin investment, which would see the Nasdaq-listed firm have a total $875 million invested in Bitcoin.
CEO Michael Saylor tweeted the announcement, which was officially released on the MicroStrategy website. It said the firm plans to issue $400 million in convertible senior notes, which can be converted into the company’s shares. And the proceeds of which will go towards buying BTC.
‘MicroStrategy intends to invest the net proceeds from the sale of the notes in Bitcoin in accordance with its Treasury Reserve Policy,’ as per the announcement.
‘At current prices, the $400 million would increase the company’s holdings by 20,833, which would bring the firm’s total crypto stash to almost 62,000 BTC.’
The terms of the security offering dictates Microstrategy will pay note holders semi-annual interest until December 2025, and the firm also reserves the right to redeem the notes for cash from December 20, 2023.
According to the announcement, the securities will only be available to qualified institutional investors and MicroStrategy could offer an additional $60 million to its initial purchasers within 13 days of the offer.
‘The notes will be convertible into cash, shares of MicroStrategy’s class A common stock, or a combination of cash and shares of MicroStrategy’s class A common stock, at MicroStrategy’s election.’
MicroStrategy Is The Talk Of Every Boardroom The World Over
MicroStrategy was pretty much an unknown mid-cap stock until August this year. Then in early August, CEO Michael Saylor announced that the company had invested $250 million of its liquid treasury in Bitcoin.
Before the initial investment, Saylor said he had several shareholder meetings, laying out the company’s intention, with the likes of BlackRock, Vanguard and JPMorgan, the three biggest investors in the firm.
Saylor said in the meetings, he offered all shareholders an opt-out by buying their shares at a premium if they weren’t happy with the direction MicroStrategy was heading. Only a few shareholders took him up on the offer.
Then just over a month later, Gigachad Saylor announced a second purchase, this time $175 million all into buying Bitcoin. And then last week, MicroStrategy announced the company was buying more BTC, this time $50 million worth.
Since the initial announcement in early August the $MSTR stock price has risen over 170% from $123 to $336.
Is MicroStrategy a Software Company or a Bitcoin Fund?
Since MicroStrategy’s foray into Bitcoin was announced, many skeptics have tried to label MicroStrategy a Bitcoin fund or even a proxy-Bitcoin ETF, but is this fair?
MicroStrategy’s main treasury holdings is Bitcoin now, and at 40,824 bitcoins, it has over $770 million in Bitcoin. And with Bitcoin (BTC) being off limits to most institutional investors, MicroStrategy is an investible asset that gives any institutional investor exposure to Bitcoin.
In a recent CNBC interview anchor Melissa Lee tried to belittle CEO Michael Saylor, repeatedly questioning whether Bitcoin was a software firm or a Bitcoin fund.
Gigachad Michael Saylor eloquently explained to the irritable anchor how he simply didn’t think the US dollar was the best place to store the cash heavy treasury. He had looked at all possibilities to store the cash, and decided Bitcoin was the best place.
And as Bitcoin has doubled in value since the initial investment, whereas $MSTR isn’t too far behind, it appears for the time being at least that it was a shrewd move.
Even for the likes of BlackRock, Vanguard and JPMorgan, MicroStrategy adopting a Bitcoin standard was worth the “risk”. It’s paying off, and we should expect many more CEOs to follow suit in the coming years.