MicroStrategy (MSTR), the renowned business intelligence firm, has successfully completed a $3 billion offering of 0% convertible senior notes due December 2029. The company plans to utilize the funds, in part or in full, to bolster its already substantial Bitcoin holdings. This bold financial maneuver aligns with MicroStrategy’s strategic vision to deepen its commitment to Bitcoin, despite recent market fluctuations impacting its share price.
On November 21, MicroStrategy’s stock (MSTR) saw a sharp decline of over 25%, according to Google Finance data. However, this drop hasn’t deterred the firm’s ambition. The 0% convertible senior notes come with a significant 55% premium, implying a strike price of approximately $672—marking the price at which investors can convert the notes into MicroStrategy’s class A common stock.
Unlike traditional bonds, these notes carry no interest, meaning bondholders won’t receive periodic payments. Instead, they are offered at a discount and will mature to their face value if not converted before the December 2029 maturity date. As “senior” notes, they hold a priority claim over common stock in the event of bankruptcy or liquidation, providing a measure of security for investors.
A Bitcoin Accumulation Strategy on a Grand Scale of MSTR
If MicroStrategy were to allocate the entire $3 billion proceeds toward Bitcoin, the firm could potentially acquire approximately 30,600 BTC at current market prices. This addition would further solidify its position as the largest Bitcoin-holding public company, with 331,200 BTC already in its reserves—valued at over $32.7 billion, according to Saylor Tracker.
The recent offering is part of MicroStrategy’s larger, multi-year plan dubbed the “21/21” initiative. Under this strategy, the company aims to raise a staggering $42 billion through a mix of $21 billion in equity and $21 billion in fixed-income securities. This approach underscores the firm’s unwavering confidence in Bitcoin as a foundational asset in its corporate treasury.
Despite its ambitious plans, MicroStrategy has faced criticism and skepticism. Cirtron Research recently disclosed a short position on MSTR, citing concerns that the stock’s valuation has become “overheated” and disconnected from Bitcoin’s underlying fundamentals. This bearish sentiment contributed to MSTR’s recent share price decline.
However, MicroStrategy’s stock has still been a standout performer in 2024, boasting an impressive 480% year-to-date increase. On November 20, it emerged as the second most-traded stock in the United States, as investors grappled with weighing the potential rewards and risks of gaining Bitcoin exposure through MSTR.
The surge in trading activity for MicroStrategy shares coincided with a record-setting $70 billion trading volume across the broader “Bitcoin Industrial Complex.” This ecosystem includes US spot Bitcoin exchange-traded funds (ETFs) and Bitcoin-centric stocks like MicroStrategy and Coinbase (COIN).
MicroStrategy’s founder and executive chairman, Michael Saylor, remains a prominent figure in the Bitcoin space. His firm’s latest move reflects a steadfast belief in Bitcoin’s long-term value proposition, even as the cryptocurrency approaches a significant psychological milestone. Bitcoin’s current price stands at $98,423—just 1.5% shy of breaching the $100,000 threshold, according to CoinGecko.
Related news: MicroStrategy’s Bold Bitcoin Move: $1.75 Billion Fundraiser and Record-Breaking Acquisitions
