MicroStrategy Plans to Issue $250 Million of Preferred Stock to Buy More Bitcoin

The funds will be used for “general corporate purposes,” including further Bitcoin purchases.

CoinChapter – MicroStrategy (NASDAQ: MSTR) announced plans to issue 2.5 million units of perpetual strike preferred stock on Friday. The proceeds from the stock sale will be used for “general corporate purposes,” which include making further Bitcoin purchases.

Each preferred stock unit will have a $100 liquidation preference, the announcement on Friday said. Dividends will be paid on a quarterly basis, starting on March 31. Shareholders will also have the option to convert preferred stock into common stock.

“We are the world’s largest Bitcoin Treasury Company, and our main business is to generate earnings, cash flow, and net income from our Bitcoin holdings, as opposed to our original software business, which now generates minimal earnings, cash flow, and net income,” MicroStrategy noted in the announcement.

MicroStrategy's Bitcoin holdings now stand at 471,107 BTC.

MicroStrategy added 10,107 Bitcoin to its holdings between January 21st and 26th. The company spent an aggregate of $1.1 billion on the recent purchases at an average price of $105,596 per Bitcoin. This brought its total Bitcoin holdings to 471,107 BTC.

In November 2024, the company made its largest purchase, acquiring 55,000 BTC for $5.4 billion.

Since August 2020, when it started buying Bitcoin with corporate funds, MicroStrategy has relied on debt issuance like convertible notes and secured loans to fund its acquisitions.

Despite a 10.3% decline in fiscal third-quarter revenues to $116.1 million, the company achieved a 5.1% Bitcoin yield during the same period. Gross profit margins also decreased to 70.4% from 79.4% in 2023.

MicroStrategy's ‘21/21 Plan' for Bitcoin accumulation.

In October 2024, MicroStrategy unveiled its “21/21 Plan,” which is designed to raise $42 billion for Bitcoin. The plan allocates $21 billion to equity and $21 billion to fixed-income securities.

The company has already sold 2.76 million shares, raising $1.1 billion under this plan. Another $4.35 billion in shares is still available for future sales.

In December 2024, MicroStrategy proposed increasing its common stock to 10.33 billion shares and its preferred stock to 1.005 billion shares. This adjustment will allow the company greater flexibility in raising funds.

Other companies are also adopting Bitcoin. Japanese firm Metaplanet ended 2024 with 1,762 BTC and announced plans to increase holdings to 10,000 BTC by 2025. Nasdaq-listed Fathom Holdings also allocated $500,000 to Bitcoin and Bitcoin exchange-traded funds to diversify its balance sheet.