MicroStrategy Seeks $700M to Boost Bitcoin Holdings and Acquisitions

On Monday, the business intelligence company Microstrategy, headed by Bitcoin (BTC) proponent Michael Saylor, revealed plans to issue $700 million in convertible senior notes due in 2028 as part of a larger strategy to bolster its Bitcoin holdings while restructuring its existing debt.

MicroStrategy’s Tactical Bitcoin Initiative

As per the announcement, the proposed notes will be unsecured, senior liabilities of MicroStrategy and are anticipated to accrue interest payable semi-annually beginning March 15, 2025.

The notes will reach maturity on September 15, 2028, unless repurchased or converted earlier under defined conditions. Importantly, the company intends to provide initial purchasers an option to purchase up to an additional $105 million in notes within a 13-day window following the initial issuance.

MicroStrategy plans to use the proceeds from this offering primarily to redeem its existing $500 million in 6.125% Senior Secured Notes due 2028. This redemption is expected to decrease the company’s debt load and release the collateral previously securing these notes, which includes roughly 69,080 BTC.

The company also disclosed on Monday that the redemption is set for September 26, 2024, pending the successful closure of the new notes offering to eligible investors.

Total Investment Hits $9.45 Billion After Latest Acquisition

This announcement comes in the wake of MicroStrategy’s recent acquisition of 18,300 Bitcoins revealed last Friday, valued at about $1.11 billion, bringing the company’s total Bitcoin holdings to around 244,800 BTC.

Notably, this significant investment constitutes approximately 1% of all Bitcoins ever issued, reinforcing MicroStrategy’s status as a prominent institutional holder of the leading cryptocurrency in the market.

MicroStrategy’s total investment in BTC now approximates $9.45 billion, with an average purchase price of about $38,585 per Bitcoin.

As of this writing, Bitcoin is priced at $57,760, reflecting a 3.5% decline over the past 24 hours. Nonetheless, in the weekly timeframe, BTC maintains some gains with an increase of 1.5% during this period.

However, broader timeframes raise concerns for BTC, as the fourteen and thirty-day periods indicate a bearish trend experienced by BTC over the last few months, after dropping below the $70,000 threshold in early August.

This has led to BTC recording losses of 1.4% and nearly 3% over the fourteen and thirty-day periods, respectively, as reported by CoinGecko data. Nonetheless, BTC continues to accrue substantial trading volume compared to the weekend, with the last 24 hours exhibiting a 125% surge in this metric, totaling nearly $32 billion.

It remains uncertain whether lower support levels will withstand any further price fluctuations anticipated this week in advance of the Federal Reserve’s (Fed) rate cut announcement.