Earlier in October, Michael Saylor, CEO of Nasdaq-listed business intelligence company, MicroStrategy addressed public concerns that his company was entering the Bitcoin space on a speculative basis. He shared his views on the company’s $425 million position in Bitcoin stating that MicroStrategy was in for the long term.
Surprisingly, despite hodling a significant stash of Bitcoin, it appears that MicroStrategy is looking to increase its reserves. In an official press release, the firm revealed that it wants to raise $400 million via a private offering of senior convertible notes. The raised funds will be channeled towards buying more Bitcoin.
MicroStrategy intends to invest the net proceeds from the sale of the notes in bitcoin in accordance with its Treasury Reserve Policy pending the identification of working capital needs and other general corporate purposes.
Convertible notes are short-term promissory debts that convert into equity. In the case of MicroStrategy’s notes, they will mature in December 2025. The company will be able to buy out the notes in cash in December 2023. Meanwhile, note-holders will receive interest twice a year. Starting from June 15, 2021, holders will receive interest on June 15 and December 15.
In conclusion, MicroStrategy began stashing Bitcoin in August 2020. The company made its first announcement of a $250 million bitcoin purchase on August 11, 2020. A few weeks later, Taylor announced a $175 million purchase.
Last Friday, the company added another $50 million.
To put things in context, MicroStrategy currently has 40,824 bitcoin under its management. This is about 0.22% of the total bitcoin in circulation.