MicroStrategy Plans to Raise $2 Billion for Bitcoin Acquisition
MicroStrategy, the world’s largest corporate Bitcoin holder, has announced its plan to raise $2 billion through zero-interest convertible notes in order to buy more Bitcoin. The company’s statement dated Feb. 18 outlined the proposal to offer the notes to institutional investors in a private placement, with an additional $300 million option for early buyers. These notes, set to mature on March 1, 2030, will be convertible into cash, stock, or a combination of both at MicroStrategy’s discretion.
The unique aspect of these notes is that they will not accrue regular interest or increase in value over time, keeping the principal amount fixed. MicroStrategy also has the option to redeem the notes for cash starting March 5, 2027, provided that the stock price trades at least 130% above the conversion price for a specified period. Investors, on the other hand, can demand a repurchase on March 1, 2028, or in the event of a fundamental corporate change, at the principal amount plus any accrued special or additional interest.
Michael Saylor-led MicroStrategy, formerly known as Strategy, plans to primarily use the proceeds from this offering to fund more Bitcoin acquisitions, with a portion allocated towards working capital. Despite the announcement, MSTR shares only saw a slight decline of just over 1.1% on Feb. 18, remaining relatively stable after hours. However, the stock has seen an impressive 373% increase over the past year, making it one of the top-performing assets in the U.S. market.
The 21/21 Plan and Bitcoin Acquisition Strategy
This latest move is in line with MicroStrategy’s broader 21/21 Plan, spearheaded by co-founder Michael Saylor, aiming to add $42 billion worth of Bitcoin to its balance sheet by 2027. The company has been utilizing debt offerings, particularly convertible notes, to fund its ongoing Bitcoin buying spree without diluting existing shareholders.
In its recent earnings report, MicroStrategy disclosed a $670.8 million net loss but confirmed that it has already secured over $21 billion towards its $42 billion target since the launch of the 21/21 Plan in late 2023. The company’s holdings currently stand at a significant 478,740 Bitcoin, as reported by BitcoinTreasuries.
Despite its substantial Bitcoin holdings, MicroStrategy has temporarily paused its regular Bitcoin purchases, with no new acquisitions recorded last week. This pause coincided with the inactivity of its at-the-market equity program between Feb. 10 and Feb. 14, as mentioned by Michael Saylor. This brief hiatus in buying activity marks only the second time in 14 weeks that MicroStrategy did not add to its Bitcoin holdings, reflecting a similar period of stock sales stagnation in early February.