Business analytics firm MicroStrategy revealed in a regulatory filing on Monday that it expects to suffer a loss of $284.5 million in the second quarter due to last month’s Bitcoin crash. Nevertheless, the company that sits on a $1.5 billion stockpile of BTC, is attempting to raise more money in debt to increase its existing reserves.
MicroStrategy Announces Proposed Private Offering to Raise $400 Million in Debt for Bitcoin Purchase
While MicroStrategy refrained from discussing its predicted loss in the public domain, it published a press release to announce its new round of fundraising. The company is planning a private offering of secured notes due in 2028 to institutional investors in both the US and outside. These notes will be wholly and unconditionally guaranteed on a senior secured basis. It is expected that MicroStrategy will raise $400 million from the exercise, which it intends to invest in expanding its BTC reserves.
— Michael Saylor (@michael_saylor) June 7, 2021
The offering and its related guarantees will not be registered under the Securities act. All offers and guarantees on the notes can only be accessed via the private offering.
The company has seen its stock prices plummet by 55% since February after Elon Musk suggested on Twitter that the price of Bitcoin seems “a little high.” At present, it holds about 92,079 Bitcoins in its account which are estimated to be worth $3.4 billion. As a matter of fact, the company owns the largest reserve of Bitcoin among all publicly traded companies.
MicroStrategy’s History With Bitcoin
Helmed by CEO Michael J. Saylor, MicroStrategy started to pump money into Bitcoin in 2020. The firm made this decision to secure its treasury from potential inflation resulting from excessive money printing. The company consistently purchased BTC even as experts began to express concerns about its price volatility. During that period, Saylor said that MicroStrategy’s continued investment in Bitcoin “reaffirms [the firm’s] belief that bitcoin, as the world’s most widely adopted cryptocurrency, can serve as a dependable store of value.”