MicroStrategy Eyes New $700M Note Issuance for Bitcoin Buys

MicroStrategy, a Nasdaq-listed software company known for its Bitcoin playbook, said it plans to raise $700 million in convertible senior notes to redeem existing debt and invest in additional Bitcoin.

The company has announced multiple debt offerings to fund its Bitcoin acquisition. It looks like the company thinks Bitcoin is the place to be.

As detailed in the announcement, the proceeds from the offering will be used to redeem all outstanding $500 million of MicroStrategy’s 6.125% senior secured notes due 2028 and for additional Bitcoin purchases.

More Bitcoin!

The new convertible note issuance aims to offer investors the potential for capital appreciation through conversion into MicroStrategy’s common stock. Investors will potentially benefit from the company’s stock price appreciation if it performs well, or in other words, its Bitcoin strategy pays off.

According to data from Google Finance, MicroStrategy’s stock has been up around 96% year-to-date, with shares trading at $134.5 and over 1000% since it started accumulating Bitcoin in August 2020. Strategic accumulation has been a central focus for the company and is viewed as a key driver of its stock performance.

The U.S. Securities and Exchange Commission (SEC) recently greenlit the leveraged MicroStrategy ETF (MSTX), a move that allows investors to amplify their exposure to the company’s stock, which is closely tied to its Bitcoin holdings.

The approval brings a new and regulated investment vehicle for traders looking to gain leveraged exposure to Bitcoin indirectly through MicroStrategy. The launch of the new product could attract a range of investors who may prefer trading ETFs over direct cryptocurrency investments.

As of September 16, MicroStrategy holds around $9.45 billion worth of Bitcoin, establishing itself as the world’s largest corporate Bitcoin holder. The move follows the company’s announcement of a new Bitcoin purchase just last week.

Bitcoin is currently trading at around $57,800, down 1% in the last 24 hours, CoinGecko’s data shows. Despite the recent downturn, the leading cryptocurrency still posts 118% gains so far this year.

Inspirational Playbook

MicroStrategy’s Bitcoin playbook has inspired a number of companies to incorporate Bitcoin into their business models. One of the names that has been recently recognized for adopting a similar approach is Metaplanet.

The Tokyo Stock Exchange-listed firm has consistently added more Bitcoin to its holdings since earlier this year as part of its strategy to use Bitcoin as its primary treasury reserve asset. The firm aims to enhance shareholder value through strategic Bitcoin accumulation in the wake of economic challenges in Japan.

Like MicroStrategy, Metaplanet also employs equity financing and debt instruments to fund its Bitcoin purchases. In August, it announced that it had secured a ¥1 billion loan from MMXX Ventures to acquire more BTC.

Since announcing its Bitcoin strategy, Metaplanet has seen substantial increases in its stock price. According to Google Finance, the company’s shares has jumped over 300% to ¥1,000 since April 2024. The company’s new direction has paid off so far with strong stock performance.

Canadian Bitcoin mining firm Cathedra Bitcoin recently announced its shift from mining operations to buying Bitcoin directly from the market. The company said in a statement dated September 16 that the change targets maximizing the firm’s Bitcoin reserves per share, a key metric for its shareholders.

Despite the shift, Cathedra will continue some mining activities while developing data operating centers to support predictable cash flows for additional Bitcoin purchases. The firm also plans to issue equity, debt options, or hybrid securities to facilitate additional acquisitions of Bitcoin, similar to MicroStrategy’s approach.

Cathedra currently holds 23 Bitcoin and has a $20 million market cap on Canada’s TSX Venture Exchange. The company views Bitcoin as a long-term investment, expecting it to become a dominant global reserve asset. Given how popular Bitcoin is, they may be correct.