MicroStrategy uses $800M note offering to buy more Bitcoin, holds 205,000 BTC

MicroStrategy has completed its latest note offering, raising over $800 million to buy more Bitcoin for its treasury reserve.

American software technology firm MicroStrategy has completed a fresh $800 million convertible note offering, with the proceeds used to add another 12,000 BTC to its Bitcoin treasury reserve.

MicroStrategy announced its intent to offer a new round of convertible notes on March 6 as Bitcoin reached a new all-time high. The company completed the private offering on March 8, with the aggregate principal amount sold valued at $800 million.

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MicroStrategy founder and chairman Michael Saylor confirmed on social media platform X that the net proceeds of the note offering and excess cash were used to acquire an additional 12,000 Bitcoin at an average of $68,477 per BTC.

Before its latest Bitcoin purchase, MicroStrategy held around 193,000 BTC at an average price of $31,544, representing a balance of $12.9 billion and a return of 112% since inception. Saylor confirmed that MicroStrategy now holds 205,000 BTC, which it has acquired for $6.91 billion at an average price of $31,5000 per coin.

MicroStrategy’s latest note offering carries an interest rate of 0.625% per annum and is payable semi-annually in March and September from Sept. 2024 onwards. The notes are convertible into cash, MicroStrategy stocks, or a combination of the two.

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The initial conversion rate for the notes is valued at 0.6677 shares of MicroStrategy’s class A common stock per $1,000 principal amount of notes. The company notes that this is equivalent to an initial conversion price of approximately $1,497.68 per share:

“This represents a premium of approximately 42.5% over the last reported sale price of $1,051.01 per share of MicroStrategy’s class A common stock on the Nasdaq Global Select Market on March 5, 2024.”

MicroStrategy made waves with its decision to allocate a sizable portion of its capital directly into Bitcoin holdings in August 2020. The decision was spearheaded by the company’s Bitcoin proponent chairman, and began with an initial $250mln investment, giving the company 21,454 BTC for its treasury holdings.

At the time, Saylor indicated that the investment was driven by the company’s belief that Bitcoin is “a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”

Perhaps more emphatic was Saylor’s insistence that Bitcoin was a superior investment to holding fiat currency, and that the company had made Bitcoin its principal holding in its treasury reserve strategy. The company’s Bitcoin holdings had already increased by over $1 billion in early January 2024. 

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