Coinspeaker
MicroStrategy to Buy More Bitcoin from Proceeds of Convertible Notes Sales
MicroStrategy Inc (NASDAQ: MSTR), the largest non-crypto corporate holder of Bitcoin (BTC), has announced its intention to raise $600 million through the issuance of Senior Convertible Notes (SCN), to purchase additional Bitcoin. Additionally, MicroStrategy said the proceeds will be allocated towards general corporate purposes, providing the company with increased financial flexibility.
MicroStrategy’s Strategic Move
Senior convertible notes, the financial instrument chosen by MicroStrategy for this fundraising endeavor, offer a unique blend of debt and equity characteristics. These notes, while initially serving as debt obligations, hold the potential for conversion into equity at a later stage. Moreover, they are structured to provide holders with priority status in the event of bankruptcy or liquidation, thus offering a degree of security uncommon in traditional equity investments.
Furthermore, the offering includes an option for initial purchasers to acquire up to an additional $90 million aggregate principal amount of notes, highlighting the strong demand for MicroStrategy’s debt securities in the market.
The notes, which will mature on March 15, 2030, unless earlier repurchased, redeemed, or converted, will bear interest payable semi-annually, further enhancing the attractiveness of the investment opportunity for potential buyers.
MicroStrategy’s decision to raise capital through the issuance of convertible notes comes at a time of heightened interest and optimism surrounding Bitcoin and digital assets more broadly. With the crypto market experiencing notable growth and maturation, institutional investors like MicroStrategy are increasingly looking to capitalize on this emerging asset class.
Moreover, the announcement of this offering coincides with a surge in MicroStrategy’s share price, which witnessed a remarkable 20% increase in early trading on Monday. After closing at $1,079 on March 3, MSTR began at $1,200 on March 4 and hit an intraday high of $1,339.
MicroStrategy was selling at $1,334 at the time of writing, up 23.5% in the day. This surge, reflecting investor optimism, emphasizes the market’s confidence in MicroStrategy’s strategic direction and its Bitcoin-centric approach to corporate treasury management.
MicroStrategy’s Bitcoin Accumulation
MicroStrategy’s proactive stance towards Bitcoin investment is well-documented, with the company steadily accumulating BTC holdings over time.
In February alone, MicroStrategy added 3,000 BTC to its reserves at an average price of $51,813, bringing its total holdings to 193,000 BTC acquired at an average price of $31,554. With Bitcoin’s price soaring to $66,332 on Monday, MicroStrategy’s Bitcoin holdings now stand at a staggering $12.8 billion.
MicroStrategy’s founder and chairman, Michael Saylor, has been an outspoken advocate for Bitcoin, highlighting its superiority over traditional assets such as gold, real estate, and the S&P 500. Saylor’s unwavering commitment to Bitcoin investment aligns with MicroStrategy’s vision of harnessing cryptocurrency as a cornerstone of its corporate strategy.
Insights from industry professionals add to the market’s positive outlook on MicroStrategy. In a recent market analysis, investment banking Benchmark rated MicroStrategy as a “buy” with a $990 target price, a target it has now surpassed.
MicroStrategy to Buy More Bitcoin from Proceeds of Convertible Notes Sales
