Microstrategy Raises $650 Million in Capital to Finance More Bitcoin Buys

News • 2020/12/14 • by

The business intelligence and mobile software sold $650 million convertible bonds to private investors at a 0.75% interest to fund bitcoin purchases.

Microstrategy intends to use the net proceeds – around $635 million after expenditures – to buy bitcoin (BTC). If the company were to continue its expected acquisition, it would have invested about $1 billion in cryptocurrency since August.

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Microstrategy Inc. has gathered $650 million from converting senior convertible notes.

Capital will be used to purchase new bitcoin.

What wall Street analysts think about Microstrategy's bitcoin dive. T he business intelligence and mobile software firm sent a note to investors on Dec. 11, revealing that it had sold $650 million worth of convertible bonds to private investors at a 0.75% interest rate per year. The transactions were concluded just days after the initial bid was made by Microstrategy, raising $400 million.

At the current rates, $635 million will add another 34,500 BTC to Microstrategy's reserve holdings. The company currently owns 40,824 bitcoins worth $751 million. Microstrategy has gained roughly $276 million in profits since its first bitcoin purchase.

That said, some Wall Street analysts have not been pleased by Microstrategy's "powerful" bitcoin investment. Citigroup analyst Tyler Radke recently downgraded Microstrategy from "neutral" to "sell," worrying that the company had become overexposed with new BTC acquisitions from convertible bonds.

Michael Saylor, CEO of Microstrategy, has also received some backlash, accused of transforming his outfit into an investment firm (IC) or beginning a bitcoin exchange-traded fund (ETF). (ETF). (ETF). (ETF). In a Twitter post this week, Saylor said that "holding BTC doesn't mean Microstrategy would become an IC."

He clarified that the 1940 Investment Co. Act says that an investment firm invests at least 40% of its assets in securities. But "bitcoin isn't security," he said, referencing the U.S. Definitions of a digital asset by the Securities Exchange Commission (SEC). Saylor has often asserted that he switched to bitcoin to retain value.

What do you think about Microstrategy's new bitcoin purchase? Please, let us know in the comments section below.