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MicroStrategy Raises $603 Million in Senior Notes to Buy More Bitcoin

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Tue, 19/03/2024 - 15:35
MicroStrategy Raises $603 Million in Senior Notes to Buy More Bitcoin
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MicroStrategy has strengthened its Bitcoin holdings with the acquisition of an additional 9,245 BTC, amounting to approximately $623 million. This strategic move was financed using proceeds from convertible senior notes and excess cash by the digital asset company.

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According to the company’s chairman, Michael Saylor, on X, the acquisition, which was made at an average price of approximately $67,382 per Bitcoin, reflects MicroStrategy's confidence in the long-term potential of digital assets. 

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Proactive Bitcoin acquisition and Treasury management

With this latest purchase, MicroStrategy now holds a substantial 214,246 BTC as of March 18, 2024. Saylor maintained that the convertible notes offering, which featured a coupon rate of 0.875% and a conversion premium of 40%, garnered significant interest from investors.

Analysts perceive MicroStrategy's decision as strategic, emphasizing that raising capital via convertible notes showcases the company's proactive stance in fortifying its financial standing and driving its growth endeavors. MicroStrategy aims to take advantage of favorable market conditions and investor interest in innovative technology firms by concentrating on utilizing convertible notes.

The recent funding round follows MicroStrategy's announcement less than a week ago about the pricing of its initial offering of $525 million in convertible senior notes due in 2031, which was originally intended to be $500 million but was expanded to accommodate rising demand.

MicroStrategy has displayed a proactive approach in acquiring Bitcoin, as evidenced by Saylor's decision in August 2020 to pivot toward integrating Bitcoin as a core asset in the company's treasury reserves. This strategy involves utilizing financial strategies like zero-interest loans to enhance the company's Bitcoin holdings.

Another recent acquisition of 14,620 Bitcoins, valued at approximately $615.7 million and completed between Nov. 30 and Dec. 26, 2023, bolstered the company's total Bitcoin reserves to around 189,150 Bitcoins by the end of last year.

Positioning ahead of halving events?

With the successful increase of its total Bitcoin holdings, the company is now well positioned ahead of next month's halving event.

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According to Samson Mow, a prominent advocate for Bitcoin and the CEO of Bitcoin-focused company Jan3, the substantial market capitalization of companies like MicroStrategy stems from their exclusive commitment to Bitcoin among all cryptocurrencies.

The potential impact of MicroStrategy's substantial Bitcoin acquisition strategy via convertible notes in the cryptocurrency realm is yet to be determined.

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