The debt consists of $600 million of convertible senior notes due 2027. MicroStrategy said it plans to use the proceeds from the offering "to acquire additional bitcoins."
The company said that as of Feb. 8, it possessed 71,079 bitcoin at an average purchase price of $16,109. With bitcoin recently trading at more than $49,000, that stash is worth $3.5 billion. That’s more than one-third of MicroStrategy’s market-cap at Friday’s close of $9.9 billion. MicroStrategy’s total revenue for 2020 was just $480.7 million.
That sounds a lot more like a bitcoin company than a software company. And its stock is trading the same way. After initially rising on the latest news, MicroStrategy shares were trading down 1.2% on Tuesday to $1,021.66. But they have skyrocketed 605% in the past six months amid the market’s mania for bitcoin.
The price of bitcoin surpassed $50,000 early Tuesday, hitting a record of $50,336 before settling slightly lower.
It’s difficult to figure out what’s in store for bitcoin at this point. Bitcoin isn’t a true currency, as it’s not used in legitimate commerce. And given its massive volatility, it’s unlikely to be so used anytime soon.
But in light of all the prominent investors and financial institutions jumping into the asset -- from Tesla (TSLA) - Get Report to Stanley Druckenmiller to BNY Mellon (BK) - Get Report -- it’s possible that a solid enough infrastructure will be created to ensure bitcoin’s long-term viability.