MicroStrategy to increase bitcoin holdings by $550M

Tysons-based business software company MicroStrategy Inc. announced Wednesday that it will increase its bitcoin holdings by as much as $550 million following a convertible debt offering. 

In August, the company had announced that it had converted $250 million from its cash holdings into more than 21,000 bitcoins, making it one of the first public companies to use cryptocurrency for cash holdings. The company announced in August it would keep its bitcoin holdings in its corporate treasury reserve — which MicroStrategy CEO Michael Saylor said in a statement would be the principal holding in its treasury reserve strategy. The company in September then announced it had purchased $425 million worth of bitcoin.

Bitcoin recently rose to a new high — gaining 34%, according to November reports, leading the asset to hit a $334 billion market value. The last time the market value was near that was nearly a year ago (Dec. 17, 2019), when it hit a $322.7 billion value, according to market reports. A single bitcoin is worth $18,508.30 as of Dec. 9.

The debt offering is expected to close on Dec. 11. The initial conversion rate for the notes is 2.5126 shares of the company’s common stock per $1,000 principal amount of notes — or approximately $397.99 per share.

“MicroStrategy estimates that the net proceeds from the sale of the notes will be approximately $537.2 million … after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by MicroStrategy,” according to a company statement. “MicroStrategy intends to invest the net proceeds from the sale of the notes in bitcoin in accordance with its Treasury Reserve Policy pending the identification of working capital needs and other general corporate purposes.”

MicroStrategy employs approximately 2,400 people and offers business data analytics software.

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