MicroStrategy offers second convertible debt in 10 days to buy more bitcoin

By Thomson Reuters Mar 14, 2024 | 8:00 AM

(Reuters) – MicroStrategy will raise capital to buy more bitcoin through convertible bonds offering for the second time in less than 10 days, as the aggressive crypto investor looks to increase its exposure into the world’s largest cryptocurrency.

The software firm said after markets closed on Wednesday that it was offering $500 million in convertible notes due in 2031 to institutional investors. The company had announced a $600 million private offering in convertible notes on March 5.

Bitcoin surpassed $73,000, hitting a record high, on Thursday.

The Tysons, Virginia-based firm joined a slew of companies offering convertible bonds in a high interest rate environment.

“MicroStrategy is now single handedly making it clear there is nothing restrictive about the (monetary) policy environment,” said Michael O’Rourke, chief market strategist at JonesTrading.

“Since late 2020, the company has come to market with convertible offerings and to a lesser extent at-the-market stock offerings for the specific purpose of investing the proceeds in bitcoin. It appears it is now becoming a weekly event.”

Convertible notes, which can be exchanged for shares when the stock hits a predetermined level, offer companies an option to raise capital at lower interest rates than regular bonds without the risk of immediately diluting shareholders like stock offerings do.

MicroStrategy, which began buying and holding bitcoins in 2020, is the largest corporate holder of the cryptocurrency as revenue from its software business eased in 2022 and 2023.

The company bought 3,000 bitcoins last month, taking its total holdings to 193,000 as of Feb. 25.

Its shares rose 1.8% in premarket trading, after hitting a 24-year high on Wednesday. The stock has surged nearly threefold so far in 2024.

(Reporting by Medha Singh in Bengaluru; Editing by Shilpi Majumdar)