A subsidiary of Microstrategy has just executed a $205 million cash loan using its current Bitcoin holdings as collateral. Silvergate Bank, a San Diego-based bank focused on cryptocurrencies, serviced the loan through the Silvergate Exchange Network (SEN), which provides loans collateralized by Bitcoin.
The loan has been secured by Bitcoin in MacroStrategy’s collateral account. Besides buying more Bitcoin, the proceeds will also be used to cover fees related to loan transactions and general corporate costs.
MicroStrategy announced in June 2021 that its existing 92,079 BTC would be held by the newly formed MacroStrategy LLC subsidiary. The company appears to have been registered with a Virginia address.
As of the end of December 2021, MicroStrategy held 124,391 BTC. With the new leveraged buy, the company will increase its holdings to roughly 128,687 BTC worth more than $6 billion.
Not long after the news was announced Tuesday morning, Saylor took to Twitter to tout the power of leveraged Bitcoin purchases, saying the strategy can “move the world.”
Give me a lever long enough and #bitcoin on which to place it, and I shall move the world.
MicroStrategy was one of the first big public companies to make buying Bitcoin part of its corporate strategy, buying $425 million of it in late 2020. Not long after, payments processor and crypto miner Block (formerly Square) and electric vehicle manufacturer Tesla did the same.
“What I was doing with Bitcoin, I don’t want to decapitalize the company. I want to keep the capital or grow the capital, but I also want to put an asset on the balance sheet. And I think a big breakthrough is that I can convert my cash from a liability to an asset,” he said at the Bitcoin 2021 conference in Miami. “And then we realized if that asset is going to go up by more than 10% a year and you can borrow money at 5%—or three or four or two—then you should borrow as much money as you can and flip it into the asset. Why wouldn’t you?”
“We’re thrilled to add MicroStrategy to our growing list of SEN Leverage borrowers,” said Silvergate CEO Alan Lane. “Their innovative approach to treasury management is an exceptional example of how institutions can utilize their Bitcoin to support and grow their business.”
Microstrategy’s stock (MSTR) is currently trading at $511.14, up 0.22% on the day.
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