MicroStrategy No Longer Stops with a New $650M Purchase

MicroStrategy No Longer Stops with a New $650M Purchase of Bitcoin (BTC)

MicroStrategy has converted the entire proceeds of its $650 million convertible bond issue into Bitcoin (BTC). The Nasdaq-listed company now holds more than 70,000 BTCs.

MicroStrategy completed a convertible bond issue in early December to acquire $650 million of Bitcoin. The company confirmed that the acquisition was completed in accordance with the Bitcoin Code company’s cash reserve policy.

Previously, the software company had already purchased 21,454 BTC in August, 16,796 BTC in September and 32,220 BTC in December. MicroStrategy now holds a total of 70,470 BTC.

MicroStrategy’s total investment now stands at $1.6 billion at the current rate, a 42% increase over the acquisition price. Unlike previous purchases, this latest transaction was achieved through the issuance of a convertible bond rather than excess cash.

The bonds were issued at a rate of 0.75% and will mature on 15 December 2025. The interest rate is to be paid semi-annually on 15 June and 15 December from 2021 onwards. MicroStrategy will retain the option to redeem the bonds for cash, MicroStrategy common shares or a combination of both.

Excessive Optimism?

Recently, MicroStrategy CEO Michael Saylor even encouraged Elon Musk to follow his lead and convert some of Tesla’s cash into BTC. Moreover, this would encourage other S&P 500 companies to follow his example.

Despite the optimism of MicroStrategy’s CEO, Wall Street analysts are concerned that the company may be overexposed to Bitcoin. Citbank recently downgraded the company’s stock rating from „neutral“ to „seller“ because of its „disproportionate“ exposure to BTC.

However, MicroStrategy is not the only institutional investor with significant exposure to Bitcoin. For example, UK asset manager Ruffer Investment Management acquired $745 million of BTC in November.