MicroStrategy Proposes $2B Convertible Note Offering for Bitcoin Purchase

MicroStrategy, the business intelligence firm led by CEO Michael Saylor, has proposed a $2 billion convertible note offering to purchase more Bitcoin. The company aims to raise funds through the issuance of 0% senior convertible notes, which can be converted into equity at a later date. The notes have a maturity date of March 1, 2030, and are subject to market and other conditions.

MicroStrategy plans to use the net proceeds from the offering to buy more Bitcoin and for working capital. The company has already purchased nearly 200,000 Bitcoin since announcing its 21/21 Plan in October 2020, bringing its total stash to 478,740 Bitcoin. This makes MicroStrategy the world's largest corporate Bitcoin holder, according to data from BitBo's Bitcoin Treasuries.

The proposed notes offer buyers the option to purchase up to an extra $300 million worth of notes within five business days after they're issued. MicroStrategy has used senior convertible notes as one of the main instruments to execute its 21/21 Plan, which targets $42 billion in capital over the next three years, split between equity and fixed-income securities.

MicroStrategy shares did not see a significant move on the news, closing down just over 1% on February 18 and trading flat after hours. However, the company's shares have performed exceptionally well over the last 12 months, up 372% compared to the broader US stock market.

Despite the Bitcoin purchases and the accompanying price rise, MicroStrategy reported a net loss in its most recent earnings report. The company's focus on Bitcoin as a reserve asset has been a controversial strategy, but it has also contributed to its significant stock price appreciation.