Virginia-based business intelligence firm MicroStrategy has announced another $700 million debt offering.
The capital will be primarily used for boosting the company's Bitcoin coffers.
The convertible notes offered by MicroStrategy are on track to mature in four years from now.
The lender will be able to force the redemption of notes if the fundamental aspects of the business undergo a dramatic change in 2028.
Such debt offerings are beneficial for lenders since they are able to earn interest on the loan amount while getting exposure to MSTR. They should be able to get the value of their shares and interest. The lender will still be able to get their principal amount no matter what. MicroStrategy going bankrupt would be the only scenario that would prevent this.
Alex DovbnyaMicroStrategy founder Michael Saylor recently explained that convertible bonds hold value for bond arbitrage players since trading volatility is very profitable for them.
"The way I think of it is I'm putting a crypto oscillator in the middle of the balance sheet…The entire crypto economy is driving volatility, and the volatility is driving the equity, and the equity is driving the options, and the options are driving up the arbitragers, which then are willing to give up billions of dollars worth of capital…" Saylor explained.
MicroStrategy holds a total of $14.3 billion worth of Bitcoin, which, of course, makes it the largest corporate Bitcoin owner by a huge margin.
Last week, the company acquired another $1.1 billion worth of Bitcoin.
As reported by U.Today, MicroStrategy now owns roughly 1.17% of all Bitcoins.
Yuri Molchan
Vladislav Sopov
Dan Burgin