The company will fund the investment through senior secured debt.

MicroStrategy (NASDAQ: MSTR), one of the pioneering corporations to invest their balance sheet reserves in cryptocurrencies, announced today its private offering of $400 million of senior secured notes, due 2028, to qualified institutional buyers and persons outside the United States. The company said it intends to use the proceeds from the sale of the notes to acquire additional bitcoins. (BusinessWire)

MicroStrategy’s existing holding

MicroStrategy’s existing holding of about 92,079 bitcoins will not be offered as security for the proposed offering of senior secured notes.

These bitcoins will in fact be henceforth be held by a newly formed subsidiary, MacroStrategy LLC.

New senior secured notes

Guarantee:

The notes will be fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by MicroStrategy Services Corporation, a wholly owned subsidiary of MicroStrategy, and certain subsidiaries of MicroStrategy that may be formed or acquired after the closing of the offering.

Security:

The notes and the related guarantees will be secured, on a senior secured basis with MicroStrategy’s existing and future senior indebtedness, by security interests on substantially all of the company’s and the guarantors’ assets, including any bitcoins or other digital assets acquired on or after the closing of the offering, but excluding the company’s existing bitcoins.

Microstrategy buying the dip?

Bitcoin is currently trading at $35,935, down substantially from its all-time high of $64,829 reached in April 2021.

MicroStrategy’s hoard of 92,079 bitcoins is therefore worth about $3.31 billion.

At the all-time high price they would have been worth $5.97 billion.

Bitcoin has been under pressure on account of a number of factors including regulatory noises out of China, Elon Musk’s volte face on accepting bitcoin for cars sold, and increasingly strident protests regarding the adverse impact on the environment from bitcoin mining.

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