MicroStrategy gets $205 million loan to buy more bitcoin
MacroStrategy, a wholly-owned subsidiary of MicroStrategy Inc, raised $205 million via an interest-only term loan due 2025. Offered by the crypto-friendly bank Silvergate Capital, the Michael Saylor-led enterprise software company intends to use the net proceeds from the loan to acquire additional bitcoins.
Per an SEC filing, the loan was “secured by certain Bitcoin held in MacroStrategy’s collateral account.” Specifically, the fiat money was granted against a bitcoin holding worth around $820 million, which represents 12% of MicroStrategy’s total crypto holding.
“The loan matures on March 23, 2025, and bears interest at a floating rate equal to the Secured Overnight Financing Rate 30 Day Average as published by the Federal Reserve Bank of New York’s website (0.099% as of the Closing Date) plus 3.70%, with a floor of 3.75% […] The loan may be prepaid at any time, subject to prepayment premiums of 0.50% and 0.25% of the loan amount prepaid for prepayments during years one and two of the loan term, respectively,” the statement further reads.
The loan was collateralised through Silvergate
The transaction was conducted through the Silvergate Exchange Network (SEN) Leverage program. The product, which was first launched in 2020, also allows the bank’s customers to obtain US dollar loans collateralized by their bitcoin holdings at some crypto exchanges that Silvergate is currently serving. Dubbed ‘SEN Leverage,’ the service is a near real-time payments platform that enables users to send US dollars 24 hours a day, 7 days a week, 365 days a year.
Silvergate already counts major crypto exchanges ranging from Kraken to Coinbase as clients. However, the California-based bank abruptly cut ties with Binance last year, but the developments didn’t impact its American affiliate exchange.
Recent data shows that MicroStrategy had added 660 bitcoins to its strategic reserves between December 30, 2021, and January 31. With its most recent purchase, the Virginia-based business intelligence firm holds an aggregate of 125,051 bitcoins, which were acquired at a total cost of around $3.78 billion and an average purchase price of approximately $30,200 apiece. The worth of the company’s total bitcoin holding comes to around $5.9 billion at current prices.
The analytics software maker, run by bitcoin bull Michael Saylor, has taken advantage of any price drop in Bitcoin to continue beefing up its investment in the world’s most-traded cryptocurrency.