MicroStrategy is Selling $1B in Stocks to Buy Additional Bitcoins
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June 15, 2021

MicroStrategy is selling up to $1 billion in stock and plans to use the proceeds to buy additional Bitcoins.

MicroStrategy has filed an S-3 form with the US Securities and Exchange Commission (SEC) informing the regulator of its intention to conduct an additional stocks placement.

Notably, MicroStrategy had announced just hours earlier it has successfully raised $500 million through a bond placement that it also intends to invest in Bitcoin.

According to the announcement:

"We intend to use the net proceeds from the sale of any class A common stock offered under this prospectus for general corporate purposes, including the acquisition of bitcoin, unless otherwise indicated in the applicable prospectus supplement. We have not determined the amount of net proceeds to be used specifically for any particular purpose."

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This model assumes MicroStrategy will be able to sell stocks "from time to time" as needed. Some market participants believe this approach to fundraising involves less risk for MicroStrategy and the crypto market than using debt instruments.

MicroStrategy currently holds around 92,000 Bitcoins, and taking into account the round closed on Monday and the current exchange rate, the total number of coins in its reserves will eventually exceed 100,000. The company added:

"Bitcoin does not pay interest or other returns and so ability to generate a return on investment from the net proceeds from this offering will depend on whether there is appreciation in the value of Bitcoin following our purchases of Bitcoin with the net proceeds from this offering. Future fluctuations in Bitcoin trading prices may result in our converting Bitcoin purchased with the net proceeds from this offering into cash with a value substantially below the net proceeds from this offering."

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