MacroStrategy, a recently formed subsidiary of MicroStrategy that holds most of its bitcoins, has taken a new $205 million loan to buy even more bitcoin.
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The loan was provided by crypto-focused Silvergate Bank and is secured by bitcoin worth $820 million held in MacroStrategy’s collateral account with an unnamed custodian mutually authorized by Silvergate and MacroStrategy.
MacroStrategy will use the loan proceeds to buy additional bitcoin, pay interest and expenses related to the loan transaction, or for general corporate purposes.
“Using the capital from the loan, we’ve effectively turned our bitcoin into productive collateral, which allows us to further execute against our business strategy,” said MicroStrategy CEO and chairman Michael Saylor.
MicroStrategy bought its first bitcoin in August 2020 and, to date, has accumulated 125,051 bitcoins worth nearly $6 billion at current prices. MicroStrategy’s subsidiary MacroStrategy was formed last June and it holds over 110,000 of MicroStrategy’s total BTC.
MicroStrategy’s bitcoin bet is paying off so far since its aggregate purchase cost is around $3.8 billion, translating to an on-paper profit of nearly $2 billion at current prices. Still, some market observers recently told The Block that MicroStrategy could struggle to pay its debt back if bitcoin’s price fell sharply since the company’s bitcoin investment is largely backed by debt worth over $2 billion.
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