MicroStrategy’s Bitcoin Buying Spree Continues: Will It Ever Stop?

June 13, 2024

MicroStrategy has announced plans on Thursday to raise $500 million to purchase more Bitcoin (BTC). This move is part of the company’s strategy to accumulate more of the cryptocurrency, which has seen significant volatility in recent times. After two smaller acquisitions in March and April, the company currently holds 214,400 BTC, valued at approximately $14.5 billion at current market prices, with an average purchase price of $35,158 per Bitcoin.

The latest announcement comes as a surprise to many, given the current market conditions. However, MicroStrategy’s CEO Michael Saylor is known for his bullish stance on Bitcoin. The company, along with other institutional investors like BlackRock and VanEck, has consistently bought the dips in the market, leaving other investors at bay. This strategy has been successful so far, with MicroStrategy’s Bitcoin holdings increasing to over 1% of the total BTC supply over time.

The company’s plans to raise $500 million through a private offering of convertible senior notes will be used to purchase additional Bitcoin, as well as for general corporate purposes. The notes will mature in 2032 and will bear interest payable semi-annually. Holders of the notes will have the right to require MicroStrategy to repurchase all or any portion of their notes for cash on June 15, 2029, or convert them into MicroStrategy shares at a rate of 2.5126 shares per $1,000 principal amount, reflecting a conversion price of $397.99 per share. MicroStrategy will settle these conversions entirely in shares of its class A common stock.

MicroStrategy previously proposed a $600 million convertible note offering in March, following a surge in its share price, subsequently purchasing an additional 9,245 BTC that month for $623 million in cash. MicroStrategy’s Bitcoin buying spree has been a significant factor in the company’s financial performance. The company’s Bitcoin holdings have appreciated significantly in value, with an unrealized profit of $7 billion as of the current market price.

Disruptvestor, an analyst and investor explained on X how MicroStrategy (MTSR) is very different from a BTC exchange-traded fund (ETF). “Saylor can use equity, debt, operating cash flow or convertible notes to keep buying Bitcoin and nothing will stop him as long as he services his debts.”

He further stated how essentially, MSTR is Bitcoin on steroids. When Saylor buys BTC, its value in fiat terms increases, making MSTR more valuable. This increased value allows Saylor to raise more fiat to buy even more BTC, perpetuating the cycle. In contrast, an ETF simply tracks the price of BTC and does not engage in this cyclical investment strategy.

The company’s strategy of buying the dips and holding onto its Bitcoin holdings has been successful so far, and it is likely to continue in the future. As the cryptocurrency market continues to evolve, it will be interesting to see how MicroStrategy and other institutional investors adapt to the changing conditions.

Disclaimer: Saha Swatilakha has positions in SHIB, BTC, ETH, LTC, BCH, USDT, MATIC, DOGE, SOL, TRX, XRP, BNB, etc. This article is provided for informational purposes only and should not be construed as financial advice.

The Shib Magazine and The Shib Daily are the official publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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