The news that MicroStrategy, a business consulting service company, will issue convertible bonds to raise funds and buy bitcoins has burst the crypto asset industry. The US Nasdaq listed company originally planned to issue US$400 million in bonds, but on December 9, it increased the total value of the bonds to US$550 million.
Public information shows that MicroStrategy has purchased a large number of bitcoins since July this year. On August 11, the company announced that it had spent $250 million to purchase 21454 BTC. Since then, BTC was purchased in September and December, with a floating profit of US$300 million.
On December 4, the company’s CEO Michael Saylor revealed on Twitter that up to now, the company has a total of about 40,824 BTC. If calculated at the current 18,000 US dollars, the company’s holdings of BTC are equivalent to US$734 million.
After MicroStrategy publicly increased its holdings of Bitcoin, its stock price has also continued to rise. The highest rise from US$120 in early August to US$358, the largest increase of 198%.
MicroStrategy has been added to the “institutional bull” of the currency market this year.
Intended to borrow US$550 million to increase BTC holdings
Looking at Michael Saylor’s Twitter, almost every one recently brought the topic #Bitcoin#, unhindered by rain and rain every day for Bitcoin. He is the CEO of MicroStrategy. His company is an American business consulting service company that uses artificial intelligence and big data solutions to provide analysis for commercial enterprises. In 2016, the company was listed on the Nasdaq.
On December 7th, a message that “US listed companies issue bonds to buy Bitcoin” put MicroStrategy into the vision of the crypto asset market. On the same day, MicroStrategy announced on its official website that it plans to issue 400 million US dollars of bonds to raise funds, mainly for investing in Bitcoin, until the company’s working capital needs and other general purposes are determined. On the evening of the 9th, the company continued to increase its weight, adding another $150 million to the value of the bond.
According to the announcement, these bonds are MicroStrategy’s unsecured senior debts, which are only sold to qualified institutional investors. The hard cap is 60 million U.S. dollars. The interest calculation date is June 15 and December 15 each year, both of which are one-off interest payments . The bond has determined its maturity date of December 15, 2025, and can be redeemed or resold according to relevant terms before maturity. But MicroStrategy has not yet announced the official launch time.
If listed companies issue bonds to buy Bitcoin, if it succeeds, it will be the first in the history of BTC’s development.
On MicroStrategy’s official website, Bitcoin and its core business “Business Intelligence” are listed on the homepage. Click on Bitcoin, the most prominent position on the homepage is the company CEO Michael Saylor’s understanding of Bitcoin:
“Bitcoin is a bank in the cyber space. It is operated by software that does not accept bribes. It provides an affordable, simple and safe savings account for billions of people around the world who have no choice or do not want to run their own hedge funds.”
Wall Street analysts were not at all surprised by MicroStrategy’s investment behavior, because this is not the first time this company has bought BTC.
On August 11 this year, MicroStrategy announced for the first time that it had bought 21,454 BTC for $250 million. At that time, analyst Jason Deane wrote on Medium that MicroStrategy was the first company to hold a large amount of Bitcoin for its reserve strategy. This is not surprising, because the company has been committed to research in forward-looking areas and intelligent business analysis. . He believes that these people who serve information are very keen and they can use some of the best analytical tools in the industry to evaluate Bitcoin.
Not only holding, MicroStrategy also participates in the Bitcoin network. According to its CEO, the company started running a full node of Bitcoin Core 0.20.1 at the end of September.
More than 40,000 BTC holdings with a floating profit of 300 million US dollars
MicroStrategy’s daring to All In BTC is probably out of optimism about this kind of digital gold.
On August 11, in the company’s first press release on the purchase of Bitcoin, Michael Saylor stated that investing in Bitcoin reflects the company’s belief that “Bitcoin, as the most widely used cryptocurrency in the world, is a reliable store of value. And attractive investment assets have long-term appreciation potential than holding cash.” He believes that the current financial situation is creating long-term risks for the company’s reserve plan. “Quantitative easing and regulatory uncertainty are the key reasons.”
In a recent interview, Michael Saylor bluntly stated that the Fed’s policies led him to persuade himself to invest the company’s cash in Bitcoin.
At the beginning of this year, the epidemic broke out, and the US securities market experienced 4 circuit breakers within a month. In order to prevent the stock market from falling, the Fed released a radical strategy, issuing unlimited US dollars to rescue the stock market. Everyone knows that flooding will cause the purchasing power of money to fall, inflation will inevitably fall on ordinary people, and the value of people’s assets will be diluted.
On November 19th, Michael Saylor tweeted his interesting views on corporate asset portfolios. He said that how to invest 600 million US dollars in the company’s fiscal reserve policy is a challenge. He summed up his life’s experience and after months of analysis, he decided to allocate 100% of his assets to Bitcoin. On the allocation ratio of real estate and gold, he wrote “0%”, “This seems reasonable to me.”
In the end, how much money Michael Saylor put in the company’s other asset reserves, his company’s investment in Bitcoin can be described as a “huge throw”.
Starting in July this year, MicroStrategy bought a large amount of BTC. From August 11, the company disclosed its data for the first time, and $250 million was invested in the purchase of bitcoins, a total of 21,454. At that time, the price of BTC was still around $11,000.
Since then, in September and December, the listed company has not stopped.
On September 14, MicroStrategy announced that it had purchased 16,796 BTC for $175 million.
On December 3, Michael Saylor revealed on Twitter that the company purchased approximately 2,574 bitcoins for $50 million on December 3, with an average price of $19,427. At that time, the company already held approximately 40,824 bitcoins.
As of 4:00 pm on December 9th, Bitcoin temporarily reported 18,000 US dollars. According to this price, MicroStrategy’s Bitcoin held was equivalent to 734 million US dollars, a floating profit of 300 million US dollars.
On October 27, MicroStrategy released its third-quarter financial report. The total revenue for the third quarter of 2020 was US$127.4 million, the operating loss was US$20.3 million, and the net loss was US$14.2 million. MicroStrategy suffered a loss in its original business in the third quarter. Its publicly disclosed bitcoin assets have made a profit of US$300 million in the past five months, which is 2.3 times the total earnings in the third quarter. Buying coins can make more money than doing products honestly.
As MicroStrategy continues to publicly increase its holdings of Bitcoin, MicroStrategy’s stock is also rising. At the beginning of August, its stock price was still fluctuating around $120, and by December 1, it had risen to a high of $358, a maximum increase of 198%.
As of December 9th, MicroStrategy stock was quoted at US$318, an increase of 165% in the four months of “buying, buying” BTC.
Michael Saylor not only promotes the company to hold Bitcoin, he also holds a lot of it. On October 28th, he said on Twitter that he holds 17,732 bitcoins, and the holding cost is about 9882 US dollars. “I have informed MicroStrategy of these holdings.”
If calculated at the price of Bitcoin at 4 pm on December 9, the total amount of Bitcoin held by Michael Saylor is equivalent to USD 319 million. Compared with the cost of USD 9,882, he has made a profit of 82%, which is approximately USD 143 million.
Whether it is Grayscale or MicroStrategy, traditional commercial companies are becoming a force that cannot be ignored in the Bitcoin market regarded as “institutional bulls”.
