Microstrategy took out $205 million in BTC-backed loans to buy more Bitcoin from a subsidiary that is leveraging the purchase from Silvergate Bank as we can see more in today’s latest Bitcoin news.
The subsidiary of Microstrategy executed a $205 million cash loan using the current BTC holdings as collateral. The Silvergate Bank focused on crypto and serviced the loan via the SilverGate Exchange NEtwork which provides loans collateralized by BTC. The loan was secured by BTC in MicroStrategy’s collateral account and besides buying more BTC, the proceeds will be used to cover the fees related to loan transactions and general corporate costs.
Give me a lever long enough and #bitcoin on which to place it, and I shall move the world.
— Michael Saylor (@saylor) March 29, 2022
Microstrategy announced that its existing 92,079 BTC will be held by the new MacroStrategy LLC subsidiary and the company seems to have been registered with a Virginia address. Microstrategy held 124,391 BTC and with the new leveraged purchase, the company will increase the holdings to 128,687 BC worth more than $6 billion. Saylor even took it to Twitter to praise the power of leveraged BTC purchases saying that this strategy can “move the world.”
Microstrategy took out a $205M loan and was one of the first public companies to make buying BTC a part of the corporate strategy when it purchased $425 million in 2020. not long after, the payments processor and miner BLock, and Tesla did the same. Michael Saylor noted:
“What I was doing with Bitcoin, I don’t want to decapitalize the company. I want to keep the capital or grow the capital, but I also want to put an asset on the balance sheet. And I think a big breakthrough is that I can convert my cash from a liability to an asset. And then we realized if that asset is going to go up by more than 10% a year and you can borrow money at 5%—or three or four or two—then you should borrow as much money as you can and flip it into the asset. Why wouldn’t you?”
Silvergate CEO Alan Lane said:
We’re thrilled to add MicroStrategy to our growing list of SEN Leverage borrowers. Their innovative approach to treasury management is an exceptional example of how institutions can utilize their Bitcoin to support and grow their business.”
The MSTR stock of Microstrategy is now trading at $511.14 or up by 0.22% on the day.
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