MicroStrategy, an American software technology firm, has completed a recent $800 million convertible note offering. The company used the proceeds to purchase an additional 12,000 BTC, expanding its Bitcoin treasury reserve. On March 6, MicroStrategy announced its plan to offer a new round of convertible notes when Bitcoin was at an all-time high. The private offering was completed on March 8, and the total value of the notes sold was $800 million.
Michael Saylor, the founder and chairman of MicroStrategy, confirmed on social media that the net proceeds from the note offering and excess cash were used to acquire the 12,000 Bitcoin. The average price per BTC was $68,477. Prior to this purchase, MicroStrategy held around 193,000 BTC at an average price of $31,544. This represented a balance of $12.9 billion and a return of 112% since the company started investing in Bitcoin.
With the recent acquisition, MicroStrategy now holds 205,000 BTC, which was obtained for $6.91 billion at an average price of $31,500 per coin. The note offering carries an interest rate of 0.625% per annum and will be paid semi-annually from September 2024 onwards. The notes can be converted into cash, MicroStrategy stocks, or a combination of both. The initial conversion rate is valued at 0.6677 shares of MicroStrategy’s class A common stock per $1,000 principal amount of notes.
MicroStrategy highlights that this initial conversion price represents a premium of approximately 42.5% over the last reported sale price of its class A common stock on the Nasdaq Global Select Market. The conversion price is around $1,497.68 per share.
In August 2020, MicroStrategy gained attention for its decision to invest a significant portion of its capital into Bitcoin. The chairman, Michael Saylor, who is a proponent of Bitcoin, led the decision. The company initially invested $250 million, acquiring 21,454 BTC for its treasury holdings. Saylor stated that the investment was driven by the belief that Bitcoin is a reliable store of value and a lucrative investment asset with long-term appreciation potential. He also argued that Bitcoin was a superior investment compared to traditional fiat currency.
By early January 2024, MicroStrategy’s Bitcoin holdings had already increased by over $1 billion. The company remains committed to Bitcoin and continues to add to its treasury reserve as part of its long-term investment strategy.
MicroStrategy should focus on creating innovative software solutions instead of gambling with their funds in the crypto market.