Business intelligence company MicroStrategy plans to sell $400 million of convertible senior notes in a private sale. It intends to use funds from the sale to buy more Bitcoin.
MicroStrategy already holds 40,824 BTC on its books (worth over $778 million). Its most recent purchase came on December 4, when it bought 2,754 BTC for a cool $50 million.
But MicroStrategy, led by Bitcoin bull Michael Saylor, apparently wants more. According to a press release issued today, “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.”
A convertible note is a debt security that allows the holder to convert the value into cash, shares in the company, or a combination of the two. Holders receive interest on the notes, which mature in December 2025, twice a year. MicroStrategy can buy out the notes in cash in December 2023.
Basically, this is a way of quickly raising cash from investors. However, depending on the state of MicroStrategy’s balance sheet, it could pin the fate of the company on not just its products and services but also the continued performance of Bitcoin.
The company’s first major Bitcoin purchase—a $250 million grab in August when the price hovered around $11,700 set the tone for what became a bull run on Bitcoin by institutional investors. The current price of the cryptocurrency is $19,100.