TL; DR
Full story
They’re at it again.
MicroStrategy (MSTR) just announced its latest plans to buy another $700 million worth of Bitcoin.
(Adding to the $14.3 billion in BTC they already own).
How on earth does MSTR continue to raise money?
Initially this was done by using cash available on the balance sheet.
Then, as their balance sheet increased in value (with the increase in the value of BTC), they borrowed against the value of their assets until they could borrow no more.
Now they issue convertible notes.
This means they will pay investors an annual interest rate of 2.25%, payable semiannually on June 15 and December 15, starting in December.
The notes mature in June 2032 unless previously repurchased, redeemed or converted.
In other words: The MSTR board is so confident that the value of BTC will increase by more than 2.25% per year every year that they are guaranteed to pay investors that fixed amount for the next eight years.
Are they crazy for doing this? Kind of.
Will this work? Based on historical data, things look good.
What happens if the value of BTC tanks and MSTR is forced to sell its BTC?
With MSTR owning ~1% of all BTC at some point, that would honestly be bad.
So we hope this doesn’t happen and that the historical trend of ‘up and to the right’ continues over the next eight years…
Gotta love the guts!