MicroStrategy Inc. boosted its convertible debt sale to purchase Bitcoin by nearly half and cut the coupon to 0%, making it virtually a straight bet on the price of Bitcoin.
Microstrategy’s Keen Investment in Bitcoin
The company already has nearly 72,000 bitcoins as of February 2. Based on the price of virtual currency on Tuesday, it costs almost $3.6 billion.
It is the second time that MicroStrategy has raised funds for cryptocurrency purchases as it raised a $650 million senior convertible note offering in December 2020.
CEO Michael Saylor has been rooting for Bitcoin for months asking other institutions to transfer a portion of their funds to the token thereby increasing profitability and protecting against inflation.
The software maker valued $900 million in senior convertible banknotes up from the $600 million announced Tuesday and allowed an additional $150 million in 13 days. The debt won’t pay interest, and the company estimates total sales to be around $1 billion; it considers the amount enough to buy about 20,000 Bitcoin at current levels.
The rate of increase in the offer speaks to the success of the previous MicroStrategy stakes on bitcoin. The corporate software company began buying crypto with its funds last summer before issuing debt in December to increase its holdings to more than $1 billion. Since then, stakes have tripled, as bitcoin has recovered 350% since it was announced its first purchase on August 11. Consequently, MicroStrategy’s stock has increased by more than 600% since then.
MicroStrategy is very focused on cryptocurrency speculation to increase its profits. His latest campaign encourages the $ 9 billion company to add a second pillar to its corporate strategy stating acquire and hold bitcoin.
MicroStrategy’s ability to increase supply indicates the high demand from bond buyers for Bitcoin – even if this is due to the token’s market price.
More Institutions in Crypto
So far, a good number of institutions have followed MicroStrategy’s route. Tesla Inc. invested $1.5 billion of its $19 billion funds into Bitcoin last week. Wall Street has increasingly taken notice of bitcoin’s meteoric rise with giants like Square, Grayscale, and BlackRock purchasing the king coin.
Morgan Stanley stated that one of its most significant private wealth funds would consider adding the token. MasterCard suggested users could soon use some cryptocurrencies to transact on its network, following a similar move by PayPal last year.
While the 0% coupon offers little income, the promise of what amounts to a call on Bitcoin has drawn a lot of interest. Even after Microstrategy quickly converted the December issue into cash, it converted no bonds since Tuesday. Bitcoin is up 75% this year, kicking past $53k due to institutional investments.
MicroStrategy Coupons will be issued for the 10th time this year at 0%. This phenomenon supports the Federal Reserve’s policy of keeping short-term interest rates close to zero.