MicroStrategy Completes $3 Billion Debt Offering for Bitcoin

MicroStrategy has completed a $3 billion debt offering to buy more bitcoins, as announced on Thursday. The company had previously stated they would issue convertible senior notes due 2029, with a 0% interest rate.

The offering was completed within three days. Initially, MicroStrategy aimed to raise $1.75 billion, but later increased the sale to $2.6 billion, along with an option for initial purchasers to acquire an additional $400 million in aggregate principal amount of the notes.

Despite having no yield, investors may be attracted to the bond due to its conversion rate of 1.4872 shares per $1,000 principal, roughly equating to $672 per share, a 55% premium over the firm’s recent stock price.

Similar to earlier debt offerings, MicroStrategy plans to allocate the funds for purchasing bitcoin. Since the firm started investing in 2020, MSTR stock has been viewed as a bitcoin play. Currently, the company holds 331,200 BTC, valued at over $30 billion, after announcing its largest bitcoin purchase earlier this week.

“Our treasury strategy is designed to provide investors with varied economic exposure to Bitcoin through a range of securities, including equity and fixed-income instruments,” stated the firm, calling itself “the world’s first and largest Bitcoin Treasury Company.”

MicroStrategy’s bitcoin purchases average around $49,874 per coin, totaling a cost of $16.5 billion. The company intends to raise $42 billion through debt and stock offerings to acquire more bitcoin.

From its recent convertible notes sale, MicroStrategy raised about $2.97 billion after covering fees and expenses. Investors can later exchange these notes for cash, MicroStrategy Class A stock, or a combination, depending on the company’s preference.

Generally, these notes cannot be converted before June 1, 2029, except under specific conditions. For instance, if MicroStrategy’s stock price rises by 30% above the conversion price by December 2026, the company can repurchase the notes at their original value plus any accrued special interest.

MSTR stock fell nearly 20% to $397.28 on Thursday after Citron Research claimed the company’s value had become “detached” from bitcoin fundamentals and revealed a short position.

Despite the drop, MicroStrategy’s stock has surged nearly 500% this year, far outpacing bitcoin’s 110% increase and the S&P 500’s 25% gain. At press time, bitcoin was trading around $98,200, according to The Block’s price page.