Business intelligence company MicroStrategy recently sold debt securities worth $400 million to fund its Bitcoin purchases. The firm already owns 40,824 Bitcoin, which is the highest number for any company.
Private sale of debt securities
MicroStrategy is selling over $400 million worth of convertible senior notes in a private sale. It will aim to use funds to buy Bitcoins. The company already holds over 40,824 Bitcoins worth $778 million. Its most recent purchase of Bitcoins happened on December 4, when it bought over 2,754 Bitcoins for $50 million.
The company, led by Michael Saylor, is apparently looking for more. It said in a firm release,
“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.”
Selling convertible notes
A convertible note is a debt security that will allow holders to convert the value of their holdings in cash or shares of a company. They can also choose to get a combination of both. The notes provide interest to the holders twice a year, which is set to mature in December 2025. MicroStrategy also has the option to buy the notes in cash in December 2023.
The option gives companies a chance to raise cash very quickly. The notes could also impact the future of the company and the kind of products and services it provides. With such huge amounts bet on Bitcoin, the firm is essentially tying its fate to the performance of the coin.
MicroStrategy’s first big Bitcoin purchase occurred in August this year when it invested $250 million in the currency. At the time, the price of the currency was around $11,700. After this, the coin entered a massive bull phase reaching new all-time highs. The coin is currently worth $19,100.