MicroStrategy is one of the world's largest independent listed analytics and business intelligence companies. Since 2020, MicroStrategy has gradually used Bitcoin as its main financial reserve asset. As of now, MicroStrategy holds approximately 244,800 Bitcoins, accounting for approximately 1% of the world's issued Bitcoins, and the market value of Bitcoin is approximately US$14.6 billion.
MicroStrategy funding sources
Its founder Michael Saylor believes that Bitcoin is "the most valuable and risk-resistant asset in the world, especially in the context of global economic uncertainty and increased risk of currency depreciation", and positions the company as a Bitcoin investment bank that purchases Bitcoin by issuing debt and other financial instruments.
In addition, Michael Saylor posted on the social platform X that MicroStrategy's Bitcoin return rate reached 4.4% this quarter and 17% so far this year.
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The funds for the purchase of Bitcoin mainly come from the proceeds of the company's stock issuance and sales. According to the agreement reached between MicroStrategy and the sales agent in August this year, the company can issue up to $2 billion worth of stocks. As of September 12, MicroStrategy has sold more than 8.04 million shares and raised about $1.11 billion.
MicroStrategy first used the free cash flow generated by the company's operations, which is also the most important source of funds for MicroStrategy. With the initial free cash flow, MicroStrategy started its layout in the cryptocurrency market.
In addition to the operating cash flow and stock issuance mentioned above, debt financing is also one of the important ways for MicroStrategy to obtain cash flow. As of June this year, MicroStrategy's total debt has reached US$3.9 billion, and its current floating income from Bitcoin investment is approximately US$4.89 billion. If the US$700 million in new debt in September is added, its total debt is already quite close to the floating income.
According to the news from the founder of MicroStrategy in September, the company will sell a total of $700 million of convertible senior notes to qualified institutional investors through private placement. These bonds can be converted into company stocks under certain conditions, thus avoiding the stock price fluctuations that may be caused by selling stocks directly.
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MicroStrategy continues to increase its holdings of Bitcoin
Data shows that MicroStrategy's stock price has risen as the company's Bitcoin holdings have increased. So far this year, the company's stock price has more than doubled, exceeding the approximately 40% increase in Bitcoin prices over the same period. As a world-renowned company with Bitcoin as its main asset reserve, MicroStrategy's continued holding of more Bitcoin has enhanced the market's confidence in Bitcoin as an institutional-level asset class and promoted its further adoption and acceptance.
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