MicroStrategy, the world's largest Bitcoin holder, is preparing to raise $1.75 billion to buy more Bitcoin through premium convertible bonds with a 0% interest rate.
MicroStrategy stated that it intends to use the proceeds from this issuance to buy more Bitcoin and for general business purposes, according to its announcement on November 18.
The company's convertible bonds with a 0% interest rate mean that they will not pay periodic interest to bondholders.
Source: Michael Saylor.
These convertible bonds are sold at a discount and will be worth their nominal value if not converted before the maturity date, which is 2029 in MicroStrategy's case.
They are also considered 'premium' compared to common stock because bondholders have priority in case of bankruptcy or asset liquidation.
MicroStrategy could buy an additional 19,065 Bitcoin at the current price if it spends the entire $1.75 billion on Bitcoin.
Data from Bitcoin Treasuries shows the company currently holds 331,200 Bitcoin, worth over $30.3 billion, after purchasing an additional amount of Bitcoin worth $4.6 billion on November 18.
See more: Bullish Bitcoin setup before the election: Forecast from VanEck.
Michael Saylor's company is currently achieving a 133% profit from its Bitcoin investment strategy, with an average purchase price of $39,292 per Bitcoin.
The purchase volume of MicroStrategy (green) and the price fluctuations of Bitcoin (blue) from September 2020. Source: Saylor Tracker.
MicroStrategy's stock (MSTR) rose nearly 13% on November 18 to reach a new high of $374.8 but fell 0.7% in after-hours trading, according to data from Google Finance.
Last month, MicroStrategy revealed plans to raise $42 billion over the next three years to accumulate more Bitcoin under the '21/21' plan — including $21 billion from equity and $21 billion from fixed-income securities.
Currently, Bitcoin is priced at $91,653 — just short of the all-time record of $93,477 set on November 13, according to data from CoinGecko.
The big question: Will Bitcoin payments make a strong comeback?
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