Let's look into the recent massive acquisition of bitcoin by Microstrategy.
Major Signals
- Microstrategy began buying bitcoin in August 2020.
- In 2020, they purchased $1billion worth of BTC.
- The crypto investment of $1 billion is now valued at $3 billion.
- The company plans to raise $900M in senior convertible notes offering to acquire more bitcoin.
Microstrategy is the most significant publicly traded business analytics and intelligence company. Its primary roles are to provide web-based reporting and analysis solutions for companies from different sectors ranging from finance to retail, health sector, insurance, and telecommunications sectors. It was founded in '89 by Michael J. Taylor and Sanju Bansal.
It began buying bitcoin in August 2020 when it first acquired it as an asset. Throughout 2020, they keep acquiring bitcoin and, throughout 2020, purchased bitcoin worth a billion USD.
The average cost at which it bought those BTC is below $16,000. And compared with the fantastic gains of bitcoin since then, it's been a wildly successful investment for the company. Since August 2020, bitcoin has gained by over 300%, and that investment of $1 billion is now valued at $3 billion.
It's no wonder then that this year, they plan to do the same again. In January, they bought $10 million worth of bitcoin, and in February bought bitcoin worth the same amount also.
The company revealed two days ago on Tuesday that it intends to sell convertible bonds worth $600 million to raise money to buy more bitcoin. This is not a new strategy for Microstrategy; they raised $650 million last year using this same strategy.
But on Wednesday, they announced plans to increase the money that would be raised through the senior convertible notes offering. The increase meant that the stake now stood at $900 million, a 50% increase from Tuesday's announcement.
As of February 8th, the company claimed to own close to 71,000 bitcoins. The further purchase with money from the note offering would rake in an additional 19,000 BTC, bringing their total bitcoin asset close to 90,000 BTC. They don't plan on selling their BTC anytime soon as they plan to hodl the crypto coin.
The news of the additional purchase spurred bitcoin's latest rally above $51,000 yesterday.
