MicroStrategy completes $650 million bond sale to finance next Bitcoin purchase

Published at: Dec. 11, 2020

MicroStrategy (MSTR), a leading business intelligence firm, announced Friday that it has raised $650 million worth of convertible bonds to finance more Bitcoin (BTC) purchases, underscoring CEO Michael Saylor’s conviction in the flagship digital asset. 

The company confirmed Friday that it had sold $650 million worth of convertible senior notes at a rate of 0.750% due in 2025. The interest rate is payable semi-annually on June 15 and December 15 beginning in 2021.

According to the press release:

“MicroStrategy intends to invest the net proceeds from the sale of the notes in bitcoin in accordance with its Treasury Reserve Policy pending identification of working capital needs and other general corporate purposes.”

The securities were issued under Rule 144A of the Securities Act of 1933 and will be available to institutional investors only.

The raise was finalized mere days after the company first announced plans to leverage bond proceeds to acquire more Bitcoin. As Cointelegraph previously reported, MicroStrategy was initially targeting a raise of $400 million. At $650 million, the firm can purchase over 36,300 BTC at current prices.

MicroStrategy shocked the world earlier this year when it announced that it would convert most of its balance sheet to Bitcoin. At the time, CEO Michael Saylor said his company was sitting on a “$500 million melting ice cube” of cash.

The company currently sits on 40,824 BTC representing over $734 million. That represents a gain of nearly $260 million from the basis acquisition price.

Wall Street analysts are concerned that MicroStrategy has become overexposed to Bitcoin, whose decade of volatility has kept many institutional investors on the sidelines until only very recently. Citbank recently downgraded MSTR to “sell” from “neutral” because of its “disproportionate” BTC focus. 

MicroStrategy may be the largest corporate Bitcoin holder, but it isn’t the only one. On Thursday, Massachusetts-based insurance firm MassMutual announced it had purchased $100 million in BTC for its general investment account, making it one of the largest corporate holders. Publicly-traded companies like Galaxy Digital (GLXY), Square (SQ) and Hut 8 Mining Corp (Hut-8) have invested between $36 million and $134 million in Bitcoin. Each company is now sitting on significant profits. 

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