Key Points
- MicroStrategy Inc. plans to raise $563.4 million by selling 8% of its Series A Perpetual Strike Preferred Stock.
- The company aims to use the funds to increase its Bitcoin holdings, due to rising demand from shareholders.
MicroStrategy Inc., a leading company with the largest Bitcoin trove, has announced plans to raise additional funds from the global capital market. The company, which currently has a valuation of approximately $85 billion, has priced 7.3 million shares of the Perpetual Strike Preferred Stock at $80 per share.
The company’s strategy is to sell 8% of the Series A Perpetual Strike Preferred Stock to raise an estimated $563.4 million. Initially, MicroStrategy aimed to raise $250 million by selling a 2.5 million $STRK [NC] stock offering.
Increased Demand for Bitcoin Exposure
The company has seen a significant increase in demand for the STRK from its shareholders, who want to indirectly benefit from Bitcoin’s volatility. MicroStrategy has stated that the sale of the Perpetual Strike Preferred Stock will be settled on February 5, 2025, allowing the company to acquire more Bitcoins.
Potential investors in MicroStrategy’s STRK will have a liquidation preference of $100 per share and will accumulate dividends at a fixed rate of 8% per annum.
MicroStrategy’s Bitcoin Strategy
Since adopting a Bitcoin strategy for its treasury, MicroStrategy has seen a significant improvement in its stock market performance. At present, the company’s Bitcoin trove of approximately 471,107 BTCs accounts for 57.32% of its market cap.
So far this year, MicroStrategy has reported a BTC Yield, a measure that shows the percentage change of the ratio between a company’s BTC trove to its assumed diluted shares outstanding, of about 2.9%.
With the backing of global investors such as Capital Group and Norges Bank, MicroStrategy is in a strong position to increase its BTC holdings to a million in the near future. Moreover, more investors are recognizing Bitcoin as a better store of value than gold, especially given the long-term macroeconomic uncertainty.
Impact on the Market
MicroStrategy’s consistent support for Bitcoin over the past few years has attracted more institutional investors, leading to a growing demand for Bitcoin, which has a fixed supply of 21 million. With approximately 2.17 million BTCs available for sale on centralized exchanges and about 1 million units left to be mined, the increasing demand is expected to have a bullish impact in the long run.
According to a peer-reviewed paper co-authored by Murray Rudd, the price of Bitcoin is on track to exceed $1 million by 2027, with the potential to reach multi-million by 2030. The anticipated Bitcoin rally will be further fueled by the expected adoption by nation-states in the near future, led by the United States at both the federal and state level.
