A subsidiary of Microstrategy just executed a $205 million cash loan using its current Bitcoin holdings as collateral. Silvergate Bank, a San Diego-based bank specializing in cryptocurrencies, handled the loan through the Silvergate Exchange Network (SEN), which provides Bitcoin-backed loans.
The loan was secured by Bitcoin in MacroStrategy’s collateral account. In addition to buying more Bitcointhe proceeds will also be used to cover loan transaction costs and corporate overhead.
MicroStrategy announced in June 2021 that its existing 92,079 BTC would be held by new subsidiary MacroStrategy LLC. The company appears to have been registered with a Virginia Address.
At the end of December 2021, MicroStrategy held 124,391 BTC. With the new leveraged purchase, the company will increase its holdings to approximately 128,687 BTC worth over $6 billion.
Shortly after the news broke on Tuesday morning, Saylor took to Twitter to tout the power of leveraged Bitcoin buys, saying the strategy can “move the world.”
Give me a lever long enough and #bitcoin on which to place it, and I will move the world.
MicroStrategy was one of the first major public companies to incorporate the purchase of Bitcoin into its corporate strategy, by buying $425 million at the end of 2020. Soon after, payments processor and crypto miner Block (formerly Square) and manufacturer of electric vehicles You’re here did the same.
“What I was doing with Bitcoin, I don’t want to decapitalize the business. I want to retain capital or grow capital, but I also want to put an asset on the balance sheet. And I think a big breakthrough is that I can converting my money from a liability to an asset,” he said at the Bitcoin 2021 conference in Miami. “And then we realized that if that asset was going to grow more than 10% a year and you could borrow money at 5% – or three or four or two – then you should borrow as much money as possible and turn it into the asset. Why wouldn’t you?
“We are delighted to add MicroStrategy to our growing list of SEN Leverage borrowers,” said Alan Lane, CEO of Silvergate. “Their innovative approach to cash management is an outstanding example of how institutions can use their Bitcoin to support and grow their business.”
Microstrategy (MSTR) stock is currently trading at $511.14, up 0.22% on the day.
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