An excerpt from the statement issued by the company:
“The notes will be unsecured, senior obligations of MicroStrategy and will bear interest payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2021. The notes will mature on February 15, 2027, unless earlier repurchased, redeemed, or converted following their terms.”
However, this is not the first time the company is borrowing to top up its Bitcoin Holdings. The business intelligence firm headed by a well-known crypto enthusiast, Michael Saylor, had previously sold debts worth more than $550 million for the explicit purpose of purchasing Bitcoin. And it has good reasons to do that again.
MicroStrategy’s share price increased by approximately 580% as the company’s Bitcoin bet has turned to be a profitable one. Bitcoin’s price rose from $11,000 in August 2020—when it made its first crypto purchase via Coinbase’s institutional service—to the $50,000 level yesterday.
At the current price, Microstrategy’s 72,000 bitcoins are worth more than $3.6 billion. In 2020, the company bought an aggregate of 70,470 bitcoins, which were acquired at an aggregate cost of $1.1 billion or an average purchase price of $15,964 per coin, well below current levels.
For reference, MicroStrategy’s market cap stands at $9.15 billion as of Tuesday, meaning the company has nearly 40% of its net value in Bitcoin.
MicroStrategy influenced Tesla’s Bitcoin purchase
The CEO of MicroStrategy, Michael Saylor, who is now an avid bitcoin proponent, was said to be the one who convinced Elon Musk to move Tesla’s funds (1.5 billion dollars) into bitcoin. Although the big party started after the news of Tesla’s purchase and its acceptance of Bitcoin as a form of payment, the company was not the first heavyweight firm to convert a portion of its cash into bitcoin.
We saw a wave of institutional investors embrace Bitcoin at the second half of 2020 – payment platforms, Square, and other Wall Street whales adopted the policy of parking their cash surpluses into crypto.