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- The strategy raises $2 billion through zero-interest convertible notes, with an option to expand the offering to $2.28 billion.
- The funds will primarily be used to acquire more Bitcoin, reinforcing the company’s aggressive crypto investment strategy.
- Investors can convert their notes into company stock at a 35% premium, but if stock prices remain low, Strategy may need to sell Bitcoin to cover obligations.
MicroStrategy, now rebranded as Strategy, has finalized the details of a $2 billion loan aimed at increasing its Bitcoin holdings. According to company CEO Michael Saylor, the loan comes through the issuance of 0% convertible senior notes due in 2030, offered exclusively to institutional investors in a private placement. Investors also have an option to purchase an additional $300 million in notes within five business days. The transaction is expected to close by February 21, 2025, subject to standard regulatory conditions.
The unsecured notes carry no interest and do not accrue principal. They mature on March 1, 2030, unless converted, redeemed, or repurchased earlier. Investors will have limited conversion rights until December 3, 2029, after which they can convert their notes into company stock at will. The initial conversion rate is 2.3072 shares per $1,000 principal, setting the conversion price at $433.43—approximately 35% higher than the company’s weighted average stock price of $321.05 recorded on February 19, 2025.
Strategy’s Bitcoin Bet and Market Implications
Strategy retains the right to redeem the notes for cash starting March 5, 2027, provided its stock price exceeds 130% of the conversion price for a specified period. Investors may also demand a cash repurchase if a fundamental change occurs within the company.
The company anticipates net proceeds of approximately $1.99 billion from this offering, which could increase to $2.28 billion if additional notes are purchased. The bulk of these funds is expected to go toward acquiring more Bitcoin, continuing Strategy’s aggressive accumulation strategy.
Currently, Strategy holds 478,740 BTC, valued at approximately $46.61 billion. The company’s average Bitcoin purchase price stands at $65,101 per BTC, reflecting a profit margin of 49.53%. However, market analysts are divided on whether this approach is sustainable. The company’s financial stability depends on Bitcoin’s market performance. If Bitcoin prices decline significantly, Strategy may need to liquidate some of its holdings to meet financial obligations.
Throughout the fundraising period, the company’s stock price remained lower than the conversion price outlined in the prospectus. If the stock price fails to exceed $433.43 before maturity, investors might choose not to convert their notes, potentially pressuring Strategy to explore alternative repayment solutions, including selling Bitcoin assets.
The outcome of this loan issuance and subsequent Bitcoin purchases will be closely watched by market participants, given the substantial financial risks and potential rewards tied to Bitcoin’s price trajectory.
