$400 million wasn’t enough. MicroStrategy increased the amount of a junk-bond issue on Tuesday in order to finance the acquisition of additional Bitcoin, offering $500 million of notes that were the first of their type in the high-yield market, an extra $100 million of notes relative to its previous issuance.
Microstrategy received around $1.6 billion in orders for the offering, including interest from a large number of hedge funds.
Lowering Bitcoin Prices as Institutional Interest Surges
The surge in interest coincides with a drop in the value of Bitcoin.
With Michael Saylor at the helm, the firm has become one of the most notable public corporations in the cryptocurrency space.
Although this is the first-ever corporate bond offer with funds intended for such acquisitions, it has previously issued convertible bonds worth roughly $1 billion in its bid to scoop up additional coins. Critics have slammed Saylor’s fixation on Bitcoin, which includes making it a formal business strategy.
MicroStrategy had expected to issue $400 million in debt, and by the time the transaction was announced on Monday, it had already received that amount of interest. According to a source familiar with the case, it sold the secured notes for a yield of 6.125 percent, which was lower than early pricing negotiations of 6.25 percent to 6.5 percent.
MicroStrategy’s Accumulation of Bitcoin
The Tysons Corner, Virginia-based firm said in a filing Monday that it would take a $284.5 million charge in its next earnings report owing to losses resulting from price swings in the digital asset. This is more than the company’s total profits since 2011.
As of mid-May, MicroStrategy had collected 92,079 Bitcoins, which it claims were purchased for $2.25 billion at an average price of $24,450 per token.
MicroStrategy purchased $250 million in Bitcoin as a treasury reserve asset in August 2020, citing diminishing cash yields, a falling dollar, and other global macroeconomic issues as justifications.
The corporation went on to make numerous more major Bitcoin acquisitions, spending approximately $2.2 billion as of May 2021 on Bitcoin at an average purchase price of roughly $24,311 per Bitcoin. The key driving force behind this technique is Michael J. Saylor.
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