Popular business intelligence company MicroStrategy has shown a noted interest in Bitcoin in recent times. The company has disclosed plans to offer convertible senior notes (debt securities) worth $400 million and subsequently invest the proceeds in Bitcoin.
Microstrategy confirmed this in a press release. The company states that it will “invest the net proceeds from the sale in bitcoin in accordance with its Treasury Reserve Policy.” Naturally, the amount gained from the sale of the notes will exclude expenses accrued from running the business when it comes time to invest in BTC.
Interested individuals will, however, not be able to purchase the securities. This is because it will only be available to qualified institutional-grade investors.
Details of the Debt Securities
As previously stated, the sale of the securities will only be available to institutional investors in accordance with Rule 144 of the Securities Act. The company will, furthermore, pay interest to all investors. The payment will take place in a semi-annual fashion. This will most likely happen in June and December of each year and is expected to span until December 2025. According to the official announcement, MicroStrategy “reserves the right to redeem the notes for cash from Dec. 20, 2023.” This simply means that the convertible notes can only be converted starting from 2023. Also, the business intelligence firm will be able to convert the senior notes to Class A shares, notes, or both.
The firm also expects to increase its convertible senior notes offering up to an additional $60 million. The additional securities will, however, only be available to the initial investors.
MicroStrategy CEO Michael Saylor furthermore confirmed this announcement on Twitter.
MicroStrategy Announces Proposed Private Offering of $400 Million of Convertible Senior Noteshttps://t.co/KvZNIbO6Fa
— Michael Saylor (@michael_saylor) December 7, 2020
MicroStrategy and the Crypto Industry
The business intelligence firm, over the last few months, has attracted a lot of attention in the crypto space. The firm is also the first Nasdaq-listed company to invest in Bitcoin following its 21,454 BTC purchase in August 2020. This singular purchase has been touted as the cause of the current Bitcoin price rally. Following this initial purchase, the company has made several other large BTC purchases. In a December 4 announcement, Saylor disclosed that MicroStrategy’s Bitcoin holdings were now a whooping 40,824 BTC. With reference to current BTC prices, the $400 million would bring the company’s holdings to approximately 62,000 bitcoins.
Bitcoin and Institutional-Grade Investors
The increase in institutional-grade investors and inflation has been linked to the current crypto price rally. Many schools of thought are of the opinion that Bitcoin and cryptocurrencies are the only reliable hedge against inflation available today. Hence, the massive influx of investors in the crypto space. Apart from MicroStrategy, other Bitcoin institutional-grade investors include Square, Grayscale investments, Cash App, etc.
Interestingly, Cash App recently disclosed that they’ve been buying every single newly minted Bitcoin every day. It is important to note that an average of 900 BTC is created every day.
At the time of publication, Bitcoin is trading at $19,497.36, with a market cap of $362,104,136,161 and a 24-hour trading volume of $24,052,327,554.
Find out more about MicroStrategy’s recent purchase and an interesting analysis of how many bitcoins are left on the Altcoin Buzz YouTube channel.