MicroStrategy Plans to Raise $1.75B From Convertible Senior Notes to Buy More Bitcoin

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.

MicroStrategy has announced plans to increase its Bitcoin (BTC) holdings significantly. The company reportedly intends to raise $1.75 billion for this purchase by offering its convertible senior notes at zero-coupon convertibles. Notably, the notes will be offered to individuals who are reasonably believed to qualify as institutional buyers as defined by “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.

A week prior, MicroStrategy announced the acquisition of 51,780 BTC, increasing its Bitcoin holdings to 331,200 BTC. It also purchased 27,200 Bitcoin at an average price of $74,463 per unit between October 31 and November 10. Following the recent market performance, its total holdings increased to $26 billion, surpassing the cash and liquid assets held by IBM, Nike, and Johnson & Johnson. As of November 17, MicroStrategy's unrealized profit stood at $13.4 billion, indicating a remarkable 112% increase.

Our research also indicates that Nike's reported cash and securities were around $10.9 billion in August, while those of IBM and Johnson & Johnson stood at $13.7 billion and $20.29 billion, respectively. However, MicroStrategy still lags behind 14 companies, including Apple and Alphabet, in terms of corporate treasury assets.

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

Michael Saylor on Company's Consistent Bitcoin Acquisition PlanCommenting on the long-term Bitcoin acquisition plan, Saylor revealed that they are currently targeting an annual Bitcoin yield of 6-10%. This suggests that the company's vision extends beyond holding Bitcoin to creating 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 reported on November 14, several analysts, including Lennix Lai, Global Chief Commercial Officer of crypto exchange OKX, and Josh Gilbert, Market Analyst at eToro, anticipate a bullish run beyond $100k by year-end.