MicroStrategy raised funds to acquire Bitcoin through its bonds
MicroStrategy has acquired the cryptocurrency Bitcoin for US$458 million. The software maker financed the purchase by selling US$1 billion in bonds. MicroStrategy is the largest corporate owner of the cryptocurrency. Including the latest purchase, the company owns 252,220 bitcoins, valued at approximately US$16 billion.
The company made its first cryptocurrency acquisition in 2020 by Michael Saylor. The company was the first in the corporate market to use Bitcoin as a treasury asset. The most recent acquisition totalled 7,420 bitcoins at an average price of approximately US$61.8 thousand per unit.
MicroStrategy issued convertible notes to finance the transaction. This is the fourth issue due in 2024. The bonds offer a yield of just over 0.6% per annum and mature in 2028. By that time, the company has committed to buy back US$500 million of the paper. At the same time, it plans to further increase its cryptocurrency assets, which it sees as a reliable financial instrument.
Company overview
Michael Saylor, Sanj Bansal, and Thomas Spar founded MicroStrategy in 1989 as a software development company. Today, the company specialises in the development of data analysis software and is a leader in the business analytics market. Its main competitors include SAP AG’s Business Objects and IBM Cognos.
Key development stages:
1. The company’s first major customer was McDonald’s Corporation. The parties signed a US$10 million contract in 1992.
2. The company went public on the Nasdaq in 1998.
3. In 2000, the company formed Alarm.com as a software research and development division.
4. MicroStrategy sold Alarm.com to venture capital firm ABS Capital Partners in 2009 for US$27.7 million, at which point the company launched its OLAP Services product.
5. A year later, the product line was expanded to include business intelligence software for mobile platforms. The solution is used on devices such as the iPhone and iPad.
6. The MicroStrategy Cloud service was launched in 2011.
Michael Saylor was CEO of MicroStrategy until 2022. He moved to the position of Chairman at his own request. This decision allowed him to focus on the company’s Bitcoin acquisition strategy. Initially, the acquisition of the cryptocurrency in 2020 was dictated by global factors. At the time, the company was facing declining cash yields and a weakening dollar. In addition, macroeconomic processes were complicating business operations. The initial investment in Bitcoin was US$250 million. In 2022, MicroStrategy owned 130,000 coins worth nearly US$4 billion.
