Key Points
- Strategy, previously known as MicroStrategy, discloses plans to buy the current Bitcoin dip with its $2 billion convertible senior notes offering.
- The company’s Bitcoin strategy has influenced numerous businesses globally to use Bitcoin as a hedge against inflation and macroeconomic uncertainty.
Formerly known as MicroStrategy, Strategy is set to capitalize on the ongoing dip in the Bitcoin market. The company plans to do this by using the proceeds from its $2 billion convertible senior notes offering.
Strategy’s Bitcoin Purchase Plan
The offering, due by 2030, is expected to close on February 21. It allows the initial purchasers an option to acquire up to an extra $300 million. If the offering is fully exercised by qualified institutional buyers, Strategy could raise up to $2.28 billion.
The company, co-founded by Michael Saylor, has several key shareholders including BlackRock Inc., Capital Group, Vanguard Group, and Morgan Stanley. Strategy has stated that it will settle conversions with cash, shares of its class A common stock, or a combination of both, at its discretion.
“The initial conversion rate is 2.3062 shares of class A common stock per $1,000 principal amount of notes, which represents an initial conversion price of approximately $433.43 per share of class A common stock. The initial conversion price represents a premium of approximately 35% over the US composite volume weighted average price of Strategy’s class A common stock,” the company noted.
Impact on Bitcoin Market
Once the current offering is finished, Strategy will have raised over $8.3 billion through convertible senior notes since March 2024. The company is also raising more funds through capital, including its previously announced $42 billion capital plan and the convertible preferred stock offering known as Strike (STRK).
Strategy’s focus remains on purchasing more Bitcoins to stay ahead of inflation and the mathematical depletion of BTC in circulating supply and mining. Strategy is reportedly the largest entity with Bitcoin in its treasury, holding about 478,740 BTCs.
Strategy’s successful Bitcoin strategy has encouraged dozens of companies worldwide to hold BTC as a hedge against macroeconomic uncertainty and inflation. Led by Metaplanet Inc., over 160 entities with Bitcoin as part of their treasury have accumulated over 3.1 million BTCs.
The increasing demand for Bitcoin by institutional investors is expected to further boost bullish sentiment in the long term. Major central banks, led by the US Federal Reserve, have identified Bitcoin as a digital gold.
