Topic: MicroStrategy Increases Its Debt-for-Bitcoin Offering to $500 Million (Read 268 times)

This is indeed an all-in kind of bet. As per the announcement, this offering is covered only by "Microstrategy" and its holding companies.

The 90K+ BTC that they hold will now be "Macrostrategy LLC". So, the bitcoins are safe. Microstrategy is offering itself as the collateral to raise this amount and, as far as the announcement implies, buy more bitcoin with the funds. This is probably the biggest known case of BTFD. The offering ends on June 14th and only then we'll know how it performed.

Macrostrategy's BTC holdings now have an average price of 23985 USD. (Which i guess is now the biggest support, Bitcoin traders would know better). With BTC inching back to above 35K, they are still in a comfortable position. Its the investors who need to decide whether they are okay taking this bet. Its all legal as far as regulations go.

Microstrategy had earlier raised 1.05 Billion USD with a similar offering in Feb 21. Mr. Saylor has bet pretty big. The investors are buying up the offerings which means he is not alone.

THREAD HERE

A company that has a few billion dollars worth of financial assets to launch a "speculative attack" over the US dollar?This is hilarious!Don't make me laugh.
This news is already old,since the Bitcoin price had recovered back to 36K USD,so the losses of Microstrategy aren't that big,I guess.
Borrowing money to buy Bitcoin seems like an extremely risky strategy.
It is clear that Microstrategy is losing money and Micheal Saylor doesn't want the Bitcoin price to drop below 30K USD.That's why he is so damn optimistic and bullish about Bitcoin.

with the debt that is piling up will it solve the problem? This speculation has been going on for a long time, maybe with debt, people will speculate wildly out there

Didn't know these two were friends but am not really surprised. Maxis get with maxis but what's curious for me to know is how exactly MicroStrategy keeps custody of their BTC. If they have a board who decides I feel like it's probably another custodial service as they won't all trust each other multisig right?

Keiser is in Russia right? I read they are now taking dollar away from there:)

Bitcoin is a great investment if you can afford to suffer a pretty big loss for a few years if things turn badly. Saylor seemed like a genius when he started buying Bitcoin at $10-20k. But why get greedy and keep buying now and risk it all, as it has a high chance of entering a bear market that can last for years? What's he gonna do if Bitcoin's price drops below the average buy price of his coins and he has no ways to keep buying "the dip"?

One, thanks for the explanation so I didn't have to run through another search on what this over means.
But, the question of Tytanowy Janusz still stands, they are basically shifting the risks, but at the same time this is not a bulletproof way of doing so, if Micro fails so will their hedging as there will be no money to pay not even the main, forget about the interest.

As much as I like what Micro is doing this new strategy seems a bit near borderline, basically, you're getting loans to bump the price of your investment, and the loans are secured by the same investment, I wonder what the SEC has to say about it. I'm pretty sure they will not go all guns on them but I can't see them getting the nod for it either, especially since they've been targeted before for their accounting.


Saylor is also the chairman of the company and counting those shares he owns, probably that board is full of yes-men.

He has bear fruit already even before the bull run.

His company was known that has been buying from the very start and that's why he's just continuing what the company has started.

They're already in profit but still incur losses due to the new purchase they've made.

I think in this world no one believes in Bitcoin more than michael saylor...

create a subsidiary for 'holding Bitcoin' and also add more debt to buy Bitcoin, I think in this world michael saylor is the craziest. but yes, I'm sure his trust in Bitcoin will bear fruit when the Bitcoin price goes to $ 100k - $ 1 million.

I think that Michael Saylor is spending to much time with Max Keiser that is always thinking bullish about Bitcoin, and he may be right in the long run after all.
Dollar is going down, inflation is going sky high and he is hoping to save his capital and prosper during dollar collapse.
South American countries are starting to adopt Bitcoin as legal tender, and it's just a matter of time when some country from Europe will do the same, maybe Georgia or Ukraine.
Sooner or later this will create bullish trend for Bitcoin despite all the fud from China, complains from IMF, Trump and Biden administration.

But is he crazy?
He really does believe that Bitcoin is the only show in town and that there is a lot
of pain coming in the near future and Bitcoin is a real safe haven.

There is a lot of things happening outside what Elon Musk tweets and what El Salvador
have done may set off a domino effect of sorts, Michael Saylor has probably factored
such events into his decisions concerning Bitcoin




He did state a few months ago that all bar 2 or 3 were on board with the Bitcoin strategy.

I always thought the name microstrategy made no sense when he was clearly making a bet on the macro environment.  Nice to see he's addressed this ridiculous naming structure. 



I'm sure they're all on board with the idea at this point.  Likely they were all Bitcoin holders long before Saylor's company investment.  They have clearly been using the company's fundraising ability prior to an ETF being approved to prop up the Bitcoin market.  One such reason to do so would be to prop up your own holdings to enrich yourself.  If that is the case (you know it is) then they'll likely set the company's shareholders up to be the bagholders while they sell and get rich.  Maybe once Saylor and friends sell their entire crypto portfolios and short the market, then you might see microstrategy sell.

Does anyone know if the decisions in that company are made by Michael Saylor or are they according to the company's board of directors? If Michael Saylor is the one making those decisions, I don't think they will stop soon.
In general, speculation in Bitcoin may be logical in the short term, because we have almost reached the bottom and the price must increase, but the real question is, will they sell if the price reaches 100 thousand dollars?

is there a loan that accept website as collateral? cause im interested 

I guess for every crazy guy against Bitcoin, we have another for Bitcoin. And this guy talks where his money is for sure. I also saw his interview before on Bloomber or CNN can't remember. He is a much more educated person even for a regular guy and doesn't talk hype, just regular facts. Not like someone we all know.

Its not safe and stable return. Its not paper issued by company that generate decent profits to gain founds for further grow. Its paper issued by dead company that is known from overexposing to high risk assets.

Maybe its too much to call microstrategy dead but:



Sales/revenue goes down year after year.

Net income was negative in 2020. In fact even when it wasn't negative (~20M on average) it was funny low compared to capitalization B4.5$ and total debt they have ($1,75B + 400mln$ that they plan to get now). Microstrtegy will need 100 years to give back its debt if BTC investment will fail and they will have to give it from their profit. Its already impossible for them to exist if btc will start to go down. 6% from 400 mln dept is 24 mln$ annualy. Rolling this single debt is more than microstartegy average annual profit.

So its not like "They are selling off the risk to Saylor," its like Saylor is gambling someone else money using his dead (unprofitable) company as collateral. In case of bankruptcy those loans wont be paid. Am I wrong?

So if btc will go up its better to invest by yourself, if BTC will go down microstrategy will bankrupt and your paper will be worthless. Its loss - loss situation for investor and win-win solution for Saylor.

People who are looking for safe harbors and stable returns on their million-dollar investments don't really seek crazy APYs like degens. A lot of us can afford that infinty% compounded APY degeneracy as individuals. On the other hand, institutions want safe investments all the time.

A return of >6% in these low interest rate times (in fact negative at some points) is a good investment for such entities. They are selling off the risk to Saylor, which is why he runs the risk of bankruptcy if he cannot service that debt.

He is one of the few rich guys who actually walk the talk when it comes to Bitcoin investments. Though it worries me that his actions are fast becoming a sort of "confidence indicator". That is why the El Salvador news couldn't have come at a better time. If countries can hold BTC in reserves, then it can never be a bad thing to have almost 100K BTC on you. I have to admit though, a part of me is appreciative but also concerned for his courage.

Just wondering. Who is buying those "notes"?

1- Person who don't believe in future of BTC, in BTC price growth will not do that because of risk of miscrostrategy bankruptcy if BTC will dump significantly (majority of microstrategy net worth is their bitcoin holdings - bought using debt)
2- Person who believe in future of BTC, in BTC price growth should not do that either. If you are so sure that BTC price will grow ... why not buy it by himself? 6% annual profit is nothing compared to BTC expected growth.

The only institution wanting to buy those "notes" is ... Tether ... to hide amount of crypto they actualy hold on their balance sheet (currently its 2%)


https://www.coindesk.com/tether-first-reserve-composition-report-usdt

Tether hold close to 50% of its balance sheet in Commercial Paper (corporate dept).

But that's just a conspiracy theory

I'm also really bullish on bitcoin for sure, but damn Saylor is crazy. He even created another subsidiary, "MacroStrategy" for the bitcoin holdings LOL.

https://bitcoinmagazine.com/business/microstrategy-macrostrategy-bitcoin-arm

They're still in profit now from when they bought most of their BTC I guess, or rather, they would have lost a lot more and continue to lose more if they kept their savings in US dollars.

I don't get why it's an attack on USD though. If you don't choose something, you're not attacking it. You're simply not choosing it?

And as per this report, they have already received offers for 1.9 Billion USD.

The recent dip has also allowed these funds to make a better decision as they understand that the way this market functions, it is going to go up in the long run.

While the people who actually know their money are deciding to bet on it, newbies will be too scared after the retracing from the almost 65K ATH.

Essentially, Microstrategy is raising money from investors by selling them "notes" saying they will use those to purchase more Bitcoins. On that 500 Million dollars, they will pay an annual "fixed" interest (That is why Senior collateral) of 6.125%.

They are taking on the price risk offering to buy up the Bitcoins. The "notes" issue is just to raise money from investors.
Not really. A 500 Million dollar purchase itself won't pump the price. Yet, the interest shown in the note offering means that qualified investors are willing to bet on Microstrategy's strategy of buying BTC. That is a positive sentiment for the overall market.

I'll leave that to the OP to answer.

Probably has something to do with the government selling bonds to the market to raise money to finance its spending. If Bitcoin bonds become a thing, that is competition for the Government bonds which are denominated in USD and backed by Govt assurance.