Bitcoin’s Biggest Corporate Investor Raises $500 Million To Buy More—Topping Expectations As Crypto Surges

Forbes

Topline

Less than a week after announcing the offering, business analytics firm MicroStrategy, which owns more bitcoin than any other corporation in the world, has raised $500 million in bonds to acquire more of the world’s largest cryptocurrency—signaling institutional investors are still optimistic about the token’s future as it pares back losses from a crash last month.

At one point worth more than $5 billion, MicroStrategy’s bitcoin holdings are now worth about $3.8 … [+] billion.

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Key Facts

Virginia-based MicroStrategy said Monday morning it completed a $500 million offering in secured notes due 2028, more than its $400 million target announced last week.

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MicroStrategy says net proceeds from the sale (after deducting commissions and other expenses) will be approximately $488 million, all of which it will use to acquire additional bitcoin.

In a sign of massive interest from institutional investors, the firm reportedly received more than $1.5 billion in orders for the offering, which was announced Monday while bitcoin prices were at a one-month low of about $33,400.

MicroStrategy shares surged nearly 15% after the announcement, lifting year-to-date gains to nearly 40%.

The company has yet to disclose when it will buy more bitcoin, but as of Monday morning, it owns about 92,079 tokens, worth nearly $3.8 billion.

Tangent

Bitcoin prices spiked more than 13% Monday morning after Tesla CEO Elon Musk, who’s fueled volatility in the token before, said Sunday the company would resume bitcoin transactions once roughly half of all mining is done using clean energy. Tesla, which is bitcoin’s second-biggest corporate investor, stopped investing in the token last month due to concerns over its carbon footprint. 

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Key Background

Given its outsized crypto investment, MicroStrategy’s stock tends to ride bitcoin’s incredibly volatile price wave. In a filing last Monday, the firm said it expects to incur an impairment loss of at least $284.5 million in the second quarter “based on the fluctuations in the market price of bitcoin.” Shares have plunged more than 50% since February, when bitcoin sank after Tesla CEO Elon Musk said prices seemed “a little high.” The cryptocurrency is down about 40% over the same period, but like MicroStrategy, its prices are up more than 300% over the past year.

Surprising Fact

MicroStrategy owns more bitcoin than any publicly traded company, but in its namesake bitcoin fund, investment manager Grayscale owns 654,885 tokens—worth more than $24 billion.

Further Reading

Bitcoin’s Biggest Corporate Backer Expects $285 Million Loss After Crypto Crash—But Wants To Raise $400 Million In Debt To Buy More (Forbes)

Musk Denies Bitcoin ‘Pump And Dump’—And Says Tesla Will Resume Transactions Once This Mining Goal Is Reached (Forbes)

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Author: Jonathan Ponciano, Forbes Staff


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