MicroStrategy's New Debt Offering
MicroStrategy, the largest corporate holder of Bitcoin, has announced a new plan to raise $700 million by issuing convertible senior notes, a type of debt security that can be converted into company equity. This marks the companyâs third debt offering in 2024. Announced by Michael Saylor, the companyâs founder, the offering could also include an additional $105 million in notes, all set to mature in September 2028.
MicroStrategy Announces Proposed Private Offering of $700M of Convertible Senior Notes $MSTR https://t.co/OCq7wj2u0P
â Michael SaylorâĄïž (@saylor) September 16, 2024
The proceeds from this new offering will be used primarily to pay off existing debt and redeem $500 million in senior secured notes. The remaining funds will go toward acquiring more Bitcoin, furthering the firmâs aggressive Bitcoin acquisition strategy.
Bitcoin Buying Continues
MicroStrategyâs goal is to strengthen its Bitcoin reserves, using the money raised from these notes to acquire more BTC. Fried Thiel, CEO of Marathon Digital Holdings, remarked that this will take âanother 12,500 BTCâ off the market.
Not everyone is thrilled with this strategy. Peter Schiff, a vocal critic of Bitcoin, expressed concern, sarcastically questioning what will happen when MicroStrategy becomes the only buyer left. He also pointed out that the company may face limits on how much debt it can issue to sustain its Bitcoin purchasing spree.
If the firm redeems its senior secured notes, it will free up around 69,080 BTC, currently being held as collateral, making more Bitcoin available to the company.
MicroStrategy's Bitcoin Holdings
As of now, MicroStrategy holds 244,800 BTC, which is valued at around $14.24 billion based on current market prices. Its latest purchase, made in September, added 18,300 BTC to its reserves, worth $1.1 billion.
The firm has maintained a dollar cost average of $38,781 per Bitcoin, resulting in an unrealized profit of about 50% for its total Bitcoin acquisitions. Despite the growing holdings, MicroStrategyâs stock (MSTR) has dropped 4.9%, closing at $134.50 on Monday, according to Google Finance.
MicroStrategyâs stock tends to mirror Bitcoin prices, with shares peaking in March 2024. Since then, the stock has declined by about 30%, while Bitcoin itself is down 21.3% from its March highs.
