MicroStrategy to raise $400 million as it ups its giant Bitcoin bet

The company is also forming a subsidiary called MacroStrategy LLC to hold its Bitcoin.
Written by Larry Dignan, Contributor

MicroStrategy is floating $400 million in bonds to buy more Bitcoin as the company also formed a subsidiary for digital asset purchases.

The subsidiary, MacroStrategy LLC, will hold MicroStrategy's 92,079 Bitcoins. MicroStrategy was an early mover in adding cryptocurrency to its balance sheet. MicroStrategy is a business intelligence software company.

By raising $400 million for Bitcoin purchases, MicroStrategy is betting that cryptocurrency prices will increase in the long run. Michael Saylor, MicroStrategy CEO, said Bitcoin is going to be one of the most disruptive technologies. In a regulatory filing, MicroStrategy said that it will incur an impairment loss of at least $284.5 million for the quarter ending June 30 based on falling Bitcoin prices.

Tesla, MicroStrategy and a few other companies have bet that digital assets can be a good reserve currency. However, some purchases have been scaled back amid falling prices. 

In 2020, MicroStrategy said it purchases more than $1 billion in Bitcoin. As of March 31, MicroStrategy said its average cost and average carrying value of Bitcoin were about $24,214 and $21,315, respectively.

Recent purchases of Bitcoin for MicroStrategy haven't turned out as well. In its first quarter earnings report, MicroStrategy said it acquired 253 Bitcoins in the second quarter with an average of $59,339 per Bitcoin. On June 8, Bitcoin was trading just above $33,000.

MicroStrategy shares have fallen along with Bitcoin from more than $1,200 in February to $469.81 June 7.

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