MicroStrategy is a cloud software company that had recently announced the intention of purchasing additional Bitcoin (BTC) worth a whopping $400 million.
This new amount will then be added to the pre-existing $3.3 billion (about 92,080 BTC), which the company already has within its own treasury. Furthermore, the BTC shall be stored in MicroStrategy, a brand-new subsidiary created by the company.
Selling bonds
In order to obtain the funds needed to make the aforementioned purchase, the company has resorted to once again sell off various bonds. Bonds are essentially a form of debt that individuals may purchase for themselves, with the added prospect of eventually being given back the principal along with interest. In other words, MicroStrategy is selling bonds in order to gain money to buy more BTC, which the firm believes can ultimately cause an increase in its overall value.
Furthermore, the company has also issued senior secured notes, which are said to mature later on in 2028. Previously, the company had sold off senior convertible notes. Simply put, the main difference between the two kinds of notes is that the convertible notes possess the ability to be converted into MSTR shares.
There are some, however, who believe that the selling of the bonds is not as valuable a sale as MicroStrategy would have us believe, as certain outlets have even gone as far as to say that these are ‘junk bonds’ mainly because of the much greater risk of potentially defaulting.
MicroStrategy doesn’t want to sell its BTC
Michael Saylor, the current Chief Executive Officer (CEO) of MicroStrategy, has no intentions of selling off any of the company’s BTC assets. Tesla, on the other hand, had sold a portion of its respective BTC investment (worth about $1.5 billion) earlier on in the year as part of an effort to potentially have Bitcoin’s liquidity be proven, according to CEO Elon Musk. Saylor is not exactly a fan of Elon either, and neither is most of the crypto community after the billionaire’s decision to remove an important use case for Bitcoin (being used as a payment method for Tesla), causing the price to plummet.
Lastly, MicroStrategy reportedly has approximately just over 70% of its respective treasury being held in the form of BTC, which has resulted in its stock becoming the most viable substitute to a BTC ETF available on the market in the United States. We can therefore expect even greater BTC purchases to take place in the foreseeable future for the company as it gradually and continuously links its funds to the world’s flagship crypto.