MicroStrategy Plans To Raise $400M In Debt And Use It To Pile Up More Bitcoin

MicroStrategy Inc MSTR said Monday it will offer $400 million in convertible senior notes and plans to invest all the raised capital in Bitcoin.

What Happened: The business intelligence software vendor said in a statement that it intends to invest the net proceeds from the sale of notes in the apex cryptocurrency “pending the identification of working capital needs and other general corporate purposes.”

The company’s stock has gained 136% on a year-to-date basis, while Bitcoin has appreciated 167.61% in the same period.

Why It Matters: The Virginia-based company is making the bullish-bet at a time when Bitcoin is hovering near its all-time-high levels of 20,089, which it reached in December 2017.

Over the weekend, Microstrategy added $50 million to its Bitcoin holdings ratcheting them up to 40,824 bitcoins worth $783.1 million, as of press time. In November, the company’s CEO Michael Saylor said, compared to gold, Bitcoin was a “million times better,” CoinDesk reported.

Last month, Citron Research said the “only safe and cost-effective way to get exposure to bitcoin” is through Microstrategy. The short seller thinks physical possession poses risks while investing in the cryptocurrency through Grayscale Bitcoin Trust GBTC involves paying a premium.

Price Action: Microstrategy shares closed nearly 2.5% higher at $336.22 on Monday and fell 1.33% in the after-hours session to $331.74. 

Bitcoin traded 0.51% lower at $19,194.84 at press-time.

Related Link: 8 Stocks To Play Bitcoin's Resurgence