MicroStrategy’s $1.75B Sale for BTC Acquisitions

• Michael Saylor’s MicroStrategy has announced a decision to raise $1.75 billion through its convertible senior notes to purchase more Bitcoin. 
• The company’s Bitcoin holdings, after recently acquiring an additional 51,780 BTC, stood at 331,200 BTC.

MicroStrategy has announced its intention to increase its Bitcoin (BTC) holding by a significant margin. According to the report, $1.75 billion intended for this purchase would be raised by offering its convertible senior notes at zero-coupon convertibles. Fascinatingly, the notes would be offered to persons who are reasonably believed to qualify to be institutional buyers as defined by the “Rule 144A under the Securities Act and to certain non-U.S.”

The offer and sale of the notes and the shares of MicroStrategy’s class A common stock issuable upon conversion of the notes, if any, have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction, and the notes and any such shares may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.

Previous Purchase and Unrealized Profit

A week ago, MicroStrategy announced the acquisition of 51,780 BTC to increase its Bitcoin holding to 331,200 BTC. Between October 31 and November 10, it also purchased 27,200 Bitcoin at an average price of $74,463 per unit. Following the recent market performance, its accumulated holding increased to $26 billion, surpassing the cash and liquid assets held by IBM, Nike, and Johnson & Johnson. As of November 17, the unrealized profit of MicroStrategy stood at $13.4 billion, representing a staggering increase of 112%.

Our research also shows that the reported cash and securities of Nike were positioned around $10.9 billion in August, while that of IBM and Johnson & Johnson stood at $13.7 billion and $20.29 billion respectively. Meanwhile, MicroStrategy still trails 14 different companies, including Apple and Alphabet, in terms of corporate treasury assets.

During the company’s Q3 2024 earnings calls, Executive Chairman Michael Saylor and CEO Phong Le disclosed a strategic goal to raise $42 billion of capital in the next three years to accumulate more Bitcoin. According to the details as reviewed by CNF, the amount would comprise $21 billion of equity and $21 billion of fixed-income securities, which they referred to as the “21/21 plan”.

Michael Saylor Speaks on Consistent Bitcoin Acquisition

Commenting on the long-term Bitcoin acquisition plan, Saylor disclosed that it currently targets an annual Bitcoin yield of 6-10%. This implies that the company’s vision extends beyond holding Bitcoin to establishing a market for BTC-backed securities.

Bitcoin is the best use of proceeds, maybe in the history of the capital markets…We are going to buy and hold Bitcoin indefinitely, exclusively, securely. If you’re waiting for us to hedge, to sell it, to get out on top, if you’re looking for us to diversify, go elsewhere.

At press time, Bitcoin was trading at $91.6k after surging by 1.4% in the last 24 hours.

As we reported on November 14, several analysts, including a global chief commercial officer of the crypto exchange OKX Lennix Lai and market analyst Josh Gilbert of eToro, anticipate a bullish run beyond $100k by year-end.

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