MicroStrategy Targets $400 Million In Capital Raise, Intends To Use Proceeds To Buy More Bitcoin

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MicroStrategy Targets $400 Million In Capital Raise, Intends To Use Proceeds To Buy More Bitcoin
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Business intelligence firm MicroStrategy is looking to boost its war chest with a capital raise. The company revealed on Monday that it is planning to sell $400 million in convertible senior notes — debt securities that can be converted into the issuing company’s shares — to “qualified institutional buyers” only in a private sale. MicroStrategy will then use the proceeds from this sale to purchase more bitcoin.

The official announcement said:

“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.”

MicroStrategy currently owns at least 40,824 bitcoins (valued at over 783 million). The company’s most recent bitcoin purchase was on December 4, when it scooped up 2,754 bitcoins for an eye-popping $50 million.

But MicroStrategy, with bitcoin bull Michael Saylor at its helm, wants more BTC. The $400 million that the firm intends to raise so as to fund more bitcoin buys will increase its stash by 20,834 at today’s prices. This will bring the firm’s total crypto holdings to 61,658 BTC. MicroStrategy undeniably owns the most bitcoin for a publicly listed company.

With the convertible senior notes, MicroStrategy will pay interest to the note-holders twice a year until they mature in December 2025. The company can, however, redeem the notes for cash, class A shares, or both starting from December 2023.

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MicroStrategy grabbed the headlines in August when it first announced a whale-tier bitcoin purchase. At the time, the firm indicated that it had bought over 21,000 bitcoins for a cool $250 million as part of its treasury reserve strategy. This mega BTC purchase is believed to have set the tone for other corporations that bought into bitcoin in the following months. 

MicroStrategy bought an additional 16,796 bitcoins in September, valued at $175 million. It was recently revealed that San Francisco-based cryptocurrency exchange Coinbase executed the bitcoin purchases on behalf of MicroStrategy without inflating the price of bitcoin.

Bitcoin is currently trading at $18,865.61.