MicroStrategy plans to sell up to $500 million of stock to but more Bitcoin

    11 Sep 2022

    MicroStrategy, a software development firm that has become a corporate Bitcoin vault, plans to sell up to $500 million of stock to fund more purchases of BTC. The deal is a sign firm’s exec Michael Saylor isn’t abandoning his bold plan to turn his software developer into a Bitcoin proxy.

    A filing on Sept. 9 with the US SEC revealed the MicroStrategy stock offering, which will be for “general corporate purposes, including the acquisition of Bitcoin.”

    This is notable because it’s the first tangible sign that founder Michael Saylor, who recently stepped down as CEO to become executive chairman and focus on buying bitcoin, really is not backing off his audacious plan to turn MicroStrategy into a crypto proxy. Since 2020, he’s used money raised from stock and bond offerings to purchase about 130,000 BTC, worth more than $2 billion.

    As a result, MicroStrategy’s stock has become pegged to the price of BTC – resulting in a $1.2 billion loss on the Bitcoin bet given the recent plunge. But the shares surged 12% on Sept. 9 as Bitcoin jumped almost 10%. However, the stock fell about 1.5% in after-hours trading following the announcement of the stock offering, which could dilute the value of existing shares.

    Since making a $250-million BTC investment in August 2020, MicroStrategy now holds billions in the crypto asset following separate buys using the company’s cash on hand and proceeds of sales of convertible senior notes in private offerings to institutional buyers. 

    Despite the recent market sell-off, Saylor still considers BTC one of the best inflation hedges and alternatives for stock buyback events. He dismissed any concerns about the cryptocurrency’s decline from its all-time high of $69,000 in November, stating that because inflation is so high, the company’s assets are actually a source of “great comfort.”

    As recently reported, Saylor and MicroStrategy were also sued by the District of Columbia for allegedly evading taxes on Saylor’s earnings in the district.

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