MicroStrategy ups the ante on bitcoin investment

Tysons company increases latest announced bitcoin buy to $900M

Published February 17, 2021 by Sydney Lake

Tysons-based business software company MicroStrategy Inc. is going all in on its bitcoin strategy: The company announced Wednesday it would raise $900 million from a convertible senior notes offering set to close on Friday.

On Tuesday, the company announced a $600 million offering, which it upped to $900 million on Wednesday. Proceeds from the offering are intended to be used to buy more bitcoin, which the company has been gobbling up since last summer. 

Through cash holdings conversions and debt offerings, MicroStrategy, led by cryptocurrency advocate Michael Saylor, has bought hundreds of millions worth of bitcoin, almost all within the last six months. With bitcoin hitting an all-time high price of $50,000 on Wednesday, the company’s 70,000-plus bitcoin are worth more than $3.6 billion — more than double MicroStrategy’s purchase price.

The destiny of money is to be encrypted. https://t.co/hFC6UGI2Iy

— Michael Saylor (@michael_saylor) September 26, 2020

But while the value of bitcoin continues to rise, MicroStrategy during the past two days has seen a drop in its stock share prices. On Tuesday (when the company announced the $600 million debt offering), MicroStrategy saw a 7% drop, closing at $955 per share. The stock price has continued its decline on Wednesday, dropping to $941.80 as of 4 p.m. MicroStrategy’s stock price hit an all-time high on Feb. 9, when it was worth more than $1,270 per share.

In August 2020, MicroStrategy announced that it had converted $250 million from its cash holdings into more than 21,000 bitcoins, making it one of the first public companies to use cryptocurrency for cash holdings. Saylor said MicroStrategy would keep its bitcoin holdings in its corporate treasury reserve — which he said would be the principal holding in its treasury reserve strategy. The company in September 2020 then announced it had purchased $425 million worth of bitcoin.

By December 2020, MicroStrategy closed a convertible debt offering by raising $650 million, which it said it plans to use to increase its bitcoin holdings.

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