MicroStrategy to Raise Another $700M for Bitcoin Buying Via Debt Offering

On Sept. 16, MicroStrategy founder Michael Saylor announced that the firm was planning its third debt offering this year, aiming to raise $700 million by issuing convertible senior notes.

The figure is the aggregate principal amount, and there is an option for an additional $105 million in notes that mature in September 2028.

Buying More Bitcoins

The firm stated that it intends to use the net proceeds from this offering to pay off existing debt and redeem $500 million in outstanding senior secured notes.

MicroStrategy Announces Proposed Private Offering of $700M of Convertible Senior Notes $MSTR https://t.co/OCq7wj2u0P

— Michael Saylor⚡️ (@saylor) September 16, 2024

The company stated that its intention is to use part of the proceeds to acquire additional Bitcoin, reinforcing its commitment to its BTC strategy. Any balance of the net proceeds will be sed “to acquire additional Bitcoin and for general corporate purposes,” it stated.

Chairman and CEO at Marathon Digital Holdings, Fried Thiel, commented:

“Well, that’s another 12,500 BTC less for the rest of us to acquire…”

Serial Bitcoin basher Peter Schiff said, “Not again,” before adding, “What happens when MSTR is the only buyer left? There is a limit to how much debt MSTR can issue to keep the pyramid from collapsing.”

By redeeming the senior secured notes, MicroStrategy will release approximately 69,080 BTC currently used as collateral.

Convertible senior notes are a type of debt security that can be converted into a predetermined amount of the issuing company’s equity at certain times during the bond’s life. They are called “senior” obligations because they have priority over other forms of debt in case of bankruptcy.

This is MicroStrategy’s third debt offering of 2024. The firm raised around $700 million in a similar offering in March and then again in June when it raised $500 million.

MicroStrategy BTC Holdings

MicroStrategy currently holds 244,800 BTC worth around $14.24 billion at current market prices. The firm’s latest acquisition was for 18,300 BTC worth around $1.1 billion, announced on Sept. 13.

According to the Saylor Tracker website, the company has a dollar cost average of $38,781 per BTC. This gives it an overall unrealized profit of around 50% for all aggregate BTC purchases.

However, company stock (MSTR) fell 4.9% on Monday, ending the day at $134.50, according to Google Finance.

MicroStrategy shares have largely mirrored Bitcoin prices, hitting a high in March but declining 30% since then. Bitcoin is currently trading down 21.3% from its March peak.