MicroStrategy to raise $1.75B with 0% interest notes to buy Bitcoin

by

As a seasoned crypto investor with a penchant for strategic moves and a soft spot for Bitcoin, I find MicroStrategy’s latest decision to raise $1.75 billion to buy more Bitcoin an astute move that aligns perfectly with my investment philosophy. The 0% senior convertible notes strategy is a testament to Michael Saylor’s foresight and the confidence he has in Bitcoin’s potential.

In simpler terms, it means that MicroStrategy, the company with the biggest Bitcoin holdings among corporations, plans to gather around $1.75 billion by selling senior notes (a type of debt security) with no interest charges. This money is intended to be used for purchasing even more Bitcoins.

In a recent announcement on November 18, MicroStrategy indicated their plans to utilize the funds gained from this offering primarily for purchasing more bitcoin and other general business purposes.

In simpler terms, the fact that the business intelligence company’s senior convertible note has a 0% rate implies that they do not make periodic payments as interest to the bondholders.

These convertible bonds offer a reduced price now but will reach their full value by the stated maturity date, 2029, unless they’re exchanged earlier; this is the scenario for MicroStrategy.

In simpler terms, this means that MicroStrategy has a higher claim or priority over common stock in cases of bankruptcy or liquidation because their holdings are considered senior. If they were to invest the entire $1.75 billion into Bitcoin, they could potentially acquire an additional 19,065 Bitcoins at current prices.

Bitcoin Treasuries data shows it currently holds 331,200 Bitcoin, worth over $30.3 billion, following its purchase of another $4.6 billion worth of Bitcoin on Nov. 18.

Michael Saylor’s company has experienced a 133% increase in value from its Bitcoin investment approach, as it purchased Bitcoin at an average cost of approximately $39,292 per coin.

On November 18, the share price of MicroStrategy (MSTR) surged by almost 13%, reaching a new record close of $374.8. However, according to Google Finance, these shares have experienced a slight decline of 0.7% in after-hours trading.

Recently, MicroStrategy disclosed its intention to amass approximately $42 billion within the subsequent three years as part of its “21/21” strategy. This strategy involves raising $21 billion through issuing equities and an additional $21 billion by selling fixed-income securities, with the aim of acquiring more Bitcoin.

At the moment, the price of Bitcoin stands at approximately $91,653 – this figure is only about 1.8% lower than its record high of $93,477 which was achieved on November 13th, according to information from CoinGecko.

Big Questions: How can Bitcoin payments stage a comeback?

Read More

2024-11-19 01:50