Business Intelligence Firm Seeks to Acquire More Bitcoin

MicroStrategy has successfully completed a $3 billion offering of 0% convertible senior notes due in December 2029. The company plans to utilize a portion or all of the proceeds from this offering to purchase additional Bitcoin, further solidifying its commitment to accumulating digital assets.

Details of the Offering

The convertible senior notes were issued at a premium of 55%, with an implied strike price of approximately $672. This predetermined price represents the value at which option holders can buy or sell MicroStrategy’s Class A common stock. The 0% senior convertible note structure means that bondholders will not receive regular interest payments, but will instead mature to face value if they are not converted prior to the maturity date.

Seniority and Priority in Bankruptcy

These convertibles hold a senior position over common stock, ensuring that holders have priority in the event of bankruptcy or liquidation. This feature provides an added layer of security for investors and underscores the appeal of convertible notes as an investment vehicle.

Potential Bitcoin Acquisition

If MicroStrategy were to allocate the entire $3 billion towards purchasing Bitcoin, it could acquire approximately 30,600 units of the cryptocurrency. This would represent a significant addition to its existing holdings, which currently stand at 331,200 Bitcoin worth over $32.7 billion – the most held by any public company.

21/21 Plan: Raising $42 Billion in Three Years

The completion of this offering is part of MicroStrategy’s ambitious plan to raise $42 billion in the next three years. The "21/21" initiative consists of two key components:

1. Equity: $21 billion will be raised through equity offerings, enabling MicroStrategy to expand its capital base and support further Bitcoin acquisitions.
2. Fixed-Income Securities: An additional $21 billion will be raised through fixed-income securities, providing a stable source of funding for the company’s growth initiatives.

Market Reaction: MSTR Shares Fall 25%

MicroStrategy shares experienced a significant decline on November 21, falling over 25% from their highest point of $536.7 to $397.28 at the closing bell. This drop was attributed in part to Citron Research revealing that it had hedged a short position on MSTR, suggesting that the company’s shares have become "overheated" and disconnected from Bitcoin fundamentals.

After-Hours Trading and Volume

Despite this decline, MSTR shares recovered 5.3% in after-hours trading, indicating that investors remain optimistic about the company’s prospects. The stock has been one of the best performers in the US markets in 2024, boasting a year-to-date return of 480%.

US Markets and Bitcoin Exposure

The significant volume traded on November 21 – with MSTR contributing to a record-setting $70 billion trading volume from the "Bitcoin Industrial Complex" (comprising US spot Bitcoin exchange-traded funds and Bitcoin-related stocks like Coinbase) – underscores the growing interest in Bitcoin exposure through MicroStrategy.

Current Market Price of Bitcoin

As of now, the price of Bitcoin stands at approximately $98,423 – just 1.5% shy of reaching the coveted milestone of $100,000.

Conclusion

MicroStrategy’s completion of a $3 billion offering of 0% convertible senior notes marks another significant step in its pursuit of acquiring more Bitcoin. With an implied strike price of around $672 and the potential to acquire approximately 30,600 units of cryptocurrency, this move further solidifies MicroStrategy’s position as a leading player in the digital asset space.

Related Articles:

• A Perfect Storm is Brewing for Bitcoin
• Bitcoin Dominance Will Fall in 2025: Benjamin Cowen, X Hall of Flame

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