MicroStrategy Announces $500 Million Convertible Notes Offering to Bolster Bitcoin Holdings

MicroStrategy, a leading business intelligence firm and the largest corporate holder of Bitcoin, has announced its intention to raise $500 million through a private offering of convertible senior notes due in 2032. This strategic move is aimed at acquiring additional Bitcoin and supporting other corporate purposes, reflecting the company’s unwavering commitment to Bitcoin as a treasury reserve asset.

The proposed offering will be conducted privately to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The convertible notes will be unsecured senior obligations of MicroStrategy, bearing interest payable semi-annually on June 15 and December 15, starting December 15, 2024. The notes will mature on June 15, 2032, unless repurchased, redeemed, or converted earlier in accordance with their terms.

The offering is subject to market conditions and other factors, with no assurance of its completion. MicroStrategy also plans to grant the initial purchasers an option to buy an additional $75 million of the notes within 13 days of the initial issuance.

MicroStrategy’s strategy to utilize debt financing for Bitcoin acquisitions dates back to 2020 when the company began accumulating the cryptocurrency as a primary reserve asset. This latest offering continues that trend, with proceeds earmarked for further Bitcoin purchases and general corporate purposes. As of now, MicroStrategy holds 214,400 BTC, valued at over $14 billion, representing more than 1% of Bitcoin’s total supply.

This move aligns with the firm’s long-term vision of leveraging Bitcoin’s potential. According to MicroStrategy’s founder and chairman, Michael Saylor, Bitcoin serves as a superior store of value compared to traditional financial assets, prompting the company’s aggressive acquisition strategy.

The convertible senior notes will offer flexibility, being convertible into cash, shares of MicroStrategy’s class A common stock, or a combination of both, at the company’s election. Conversion before December 15, 2031, will be allowed only under specific conditions and during certain periods. After that date, conversion can occur anytime until the second scheduled trading day before the maturity date.

MicroStrategy has set forth conditions under which it may redeem the notes for cash on or after June 20, 2029. If fewer than all notes are redeemed, at least $75 million in aggregate principal must remain outstanding and not subject to redemption at the relevant notice date. Holders will also have the right to require the company to repurchase all or part of their notes on June 15, 2029.

The notes and any shares of MicroStrategy’s class A common stock issued upon conversion will not be registered under the Securities Act or any other jurisdiction’s securities laws. Therefore, they cannot be offered or sold in the U.S. without meeting specific legal conditions. The reference price for calculating the initial conversion price will be based on the U.S. composite volume-weighted average price of MicroStrategy’s class A common stock on the pricing date.

This announcement comes amid a notable rebound in crypto markets and increased corporate interest in Bitcoin. Other firms, inspired by MicroStrategy’s strategy, have also started to adopt Bitcoin as a treasury asset. For example, Semler Scientific and DeFi Technologies recently made significant Bitcoin purchases, signaling a growing trend among corporations.