• MicroStrategy has expressed its intention to buy more of the leading cryptocurrency.
  • While the Nasdaq-listed firm has seen its shares soar in tandem with Bitcoin price, its stock has plummeted after BTC fell.
  • The business intelligence firm formed a new subsidiary called MacroStrategy to hold its cryptocurrency stash.

Business intelligence firm MicroStrategy announced that it is borrowing $400 million to buy more Bitcoin. The company intends to offer senior secured notes to raise funds to purchase additional BTC.

MicroStrategy takes on impairment of over $280 million

MicroStrategy stated that it intends to buy an extra $400 million in Bitcoin to add to the 92,079 BTC currently held in its treasury. The cloud software company announced that these cryptocurrencies would be held in a new subsidiary called MacroStrategy.

At the current price of around $33,755, this would enable the company to purchase another 11,850 Bitcoin. The Nasdaq-listed firm is yet again raising money to fund the purchase by selling bonds.

MicroStrategy’s previous bond sales involved selling senior convertible notes. In this current sale, the company is issuing senior secured notes that will mature in 2028. 

By selling bonds, people can buy the debt from the business with the promise of receiving back their principal and interest. Institutions can purchase debt in MicroStrategy, and the business intelligence firm can then scoop up more Bitcoin as it believes that the leading cryptocurrency will increase in value.

While Michael Saylor, the CEO of MicroStrategy, has been leading the institutional wave of purchasing Bitcoin, it has drawn the attention of many crypto critics. 

According to Bloomberg, the private placement is $23 million higher than the company’s entire operating cash flow since 2016. Due to the recent volatility in Bitcoin price, the firm is taking a $284.5 million impairment loss during the second quarter of this year.  The company’s total impairments are up to $500 million.

Marc Lichtenfeld, the chief income strategist at the Oxford Club, commented:

“The $400 million in debt isn’t being used to fund an acquisition or growth. It’s being used to speculate on a volatile asset. Does MicroStrategy even have a business anymore, or is it simply a proxy for Bitcoin – with borrowed money?”

Although some of the firm’s impairment loss is due to arcane accounting rules, MicroStrategy’s bet on Bitcoin looks drastically different at current prices compared to the cryptocurrency’s all-time high near $64,000. 


Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Recommended content


Recommended Content

Editors’ Picks

Ethereum attempts recovery following first rate cut in four years

Ethereum attempts recovery following first rate cut in four years

Ethereum is trading above $2,330 on Wednesday as the market is recovering following the Federal Reserve's decision to cut interest rates by 50 basis points. Meanwhile, Ethereum exchange-traded funds recorded $15.1 million in outflows.

More Ethereum News
Bitcoin offers diversity for traditional investors: BlackRock

Bitcoin offers diversity for traditional investors: BlackRock

Bitcoin (BTC) is trading above $60,000 on Wednesday following the release of BlackRock's latest white paper, which addresses some of the top crypto assets' unique advantages to investors compared to traditional asset classes.

More Bitcoin News
XRP pulls back 4% even as Ripple releases details of stablecoin RLUSD

XRP pulls back 4% even as Ripple releases details of stablecoin RLUSD

Ripple (XRP) shared details of its stablecoin project Ripple USD (RUSD) in a blog published on Tuesday. The cross-border payment remittance firm discusses relevant legislation and plans to support the digital asset economy through RLUSD. 

More Ripple News
Bitcoin traders keep powder dry ahead of Fed decision on interest rates

Bitcoin traders keep powder dry ahead of Fed decision on interest rates

Bitcoin retraces slightly, trading above $59,000 on Wednesday, as crypto markets brace for the upcoming interest-rate decision by the US Federal Reserve, which is expected to lower interest rates for the first time in more than four years.

More Bitcoin News
Bitcoin: On the road to $60,000

Bitcoin: On the road to $60,000

Bitcoin price retested and bounced off from the daily support level of $56,000 this week. US spot Bitcoin ETFs posted $140.7 million in inflows until Thursday and on-chain data supports a bullish outlook.

Read full analysis
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

BTC

ETH

XRP