Business intelligence giant MicroStrategy announced to sell up to $400 million of Convertible Senior Notes to invest in bitcoin.
MicroStrategy, which is the world’s largest business intelligence company revealed yesterday its debt securities will be offered to qualified institutional buyers directly in the Proposed Private Offering.
Senior convertible notes are the debt securities that can be converted into equity. This means the investor can get shares of the issuer’s company instead of returns in the form of the loan amount plus interests.
As stated in the announcement, the publicly-traded Microstrategy will allocate the funds from the securities into the world’s dominant cryptocurrency:
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.
The US-based company currently holds 40,824 bitcoins. As its CEO Michael Saylors tweeted this weekend, the company spent around $50 million for the latest acquisition of 2,574 bitcoins.
MicroStrategy has purchased approximately 2,574 bitcoins for $50.0 million in cash in accordance with its Treasury Reserve Policy, at an average price of approximately $19,427 per bitcoin. We now hold approximately 40,824 bitcoins.https://t.co/nwZcM9zAXZ— Michael Saylor (@michael_saylor) December 4, 2020
MicroStrategy has been heavily investing in Bitcoin since August 2020. The company made split investments of $425 million in dominant cryptocurrency as a part of a new capital allocation strategy announced this summer.
The company turned towards alternative assets like Bitcoin due to the weakening US dollar and historically low-interest rates. As MicroStrategy’s CEO Michael Saylor said earlier Bitcoin is a “dependable store of value with more long-term appreciation potential than hilding cash”. According to him:
MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.
MicroStrategy is one of the biggest corporate investors in Bitcoin, which is at the center of institutional investors’ attention since the pandemic.