MicroStrategy Expands Bitcoin Holdings with $786 Million Purchase

MicroStrategy, the business intelligence firm led by Executive Chairman Michael Saylor, has once again demonstrated its commitment to Bitcoin by completing an $800 million offering of convertible senior notes and using the proceeds to acquire additional Bitcoin. This move further solidifies MicroStrategy’s position as the largest corporate holder of the cryptocurrency.

On June 20, 2024, MicroStrategy announced the completion of its offering of 2.25% convertible senior notes due 2032. The offering, which was initially proposed at $500 million, was upsized to $800 million due to strong market demand. After deducting initial purchasers’ discounts, commissions, and estimated offering expenses, the net proceeds amounted to approximately $786 million.

Utilizing these proceeds along with excess cash, MicroStrategy swiftly moved to purchase an additional 11,931 Bitcoin at an average price of $65,883 per BTC. This acquisition, completed between April 27 and June 19, brings MicroStrategy’s total Bitcoin holdings to 226,331 BTC, valued at approximately $14.9 billion at current market prices.

The company’s Bitcoin acquisition strategy, initiated in August 2020, has seen MicroStrategy accumulate its holdings at an average price of $36,798 per Bitcoin, representing a total investment of about $8.33 billion. This latest purchase underscores the firm’s unwavering belief in Bitcoin as a store of value and a hedge against inflation.

The convertible notes offering provides insight into MicroStrategy’s financial strategy. The notes, unsecured senior obligations of the company, bear interest at 2.25% per annum and are set to mature on June 15, 2032. They offer conversion options into cash, shares of MicroStrategy’s class A common stock, or a combination thereof, at the company’s discretion. The initial conversion rate is 0.4894 shares per $1,000 principal amount, equivalent to a conversion price of approximately $2,043.32 per share – a 35% premium over the stock’s weighted average price on June 13, 2024.

MicroStrategy’s aggressive Bitcoin acquisition strategy has had a significant impact on its financial performance and stock price. Despite reporting a net loss of $53.1 million in the first quarter of 2024, the company’s shares have risen dramatically since it began purchasing Bitcoin in 2020. As of June 20, 2024, MicroStrategy’s stock price stood at $1,507, representing a year-to-date increase of 112%.

The company’s Bitcoin holdings now account for more than 1% of the total Bitcoin supply, cementing its status as a major player in the cryptocurrency market. This latest acquisition comes at a time when Bitcoin’s price has shown strong performance, trading at around $66,000 as of the announcement date.

MicroStrategy’s continued investment in Bitcoin reflects a broader trend of institutional adoption of cryptocurrencies. While the company leads in terms of corporate Bitcoin holdings, other firms have also begun to add Bitcoin to their balance sheets, albeit in more modest amounts.

However, it’s important to note that while MicroStrategy’s Bitcoin holdings have appreciated significantly since its initial purchases, the volatile nature of cryptocurrency markets means that the value of these assets can fluctuate dramatically. The company’s financial performance remains closely tied to Bitcoin’s price movements, as evidenced by past market reactions to cryptocurrency price swings.