• MicroStrategy plans to raise $700 million via convertible notes to buy Bitcoin and pay off debt.
  • $500 million will be used to repay existing senior secured notes due in 2028 with a 6.125% interest rate.

MicroStrategy, a business intelligence company known for its large investments in Bitcoin, is planning to raise $700 million through the MicroStrategy convertible senior notes to fund more Bitcoin purchases and manage its debt. CEO Michael Saylor announced that MicroStrategy will use $500 million from the offering to repay senior secured notes with a 6.125% interest rate due in 2028. The remaining funds will be allocated for buying more Bitcoin and general business expenses.

Further, MicroStrategy issues unsecured convertible senior notes, with interest payments starting in March 2025. Further, only institutional investors can participate in this offering. 

Effect of Bitcoin Purchases on MicroStrategy’s Finances

MicroStrategy’s Bitcoin purchase strategy using debt has made it one of the largest public holders of cryptocurrency globally. CEO Michael Saylor has also been a strong advocate of this approach (Bitcoin purchase). He believes it adds value to the company’s overall MicroStrategy stock performance.

By June 2024, the company had accumulated 244,800 BTC, worth nearly $10 billion, including a recent acquisition of 18,300 BTC valued at over $1 billion.

However, this committed Bitcoin buying also impacted MicroStrategy’s financials. In the second quarter of 2024, the company reported a net loss of $102.6 million, or $5.74 per share, a sharp contrast to the $22.2 million net income in the same period last year. This loss was primarily due to a $180.1 million impairment from the volatility of its large Bitcoin holdings.

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