MacroStrategy obtains $205M BTC collateralised loan to buy more Bitcoin

  • MacroStrategy’s parent firm MicroStrategy already has a sizeable Bitcoin chest of more than 124,390 coins
  • The interest-only term was provided by Silvergate, which specialises in FinTech and cryptocurrency, through the Silvergate Exchange Network leverage program.

MacroStrategy, a subsidiary of the mobile software and cloud-based services provider MicroStrategy, has today been granted a $205 million loan to continue with its Bitcoin acquisition mission.

In a press release published a few hours ago, MicroStrategy explained that the loan was collateralised by a fraction of the Bitcoins its unit owns – now in a collateral account under the custody of the two.

Though specifics of the amount involved were not included in the press release, an SEC filing released last Wednesday shows that the loan was secured against a bitcoin holding worth around $820 million. The subsidiary is expected to repay the loan and the interest accrued by March 2025.

“The loan matures on March 23, 2025, and bears interest at a floating rate equal to the Secured Overnight Financing Rate 30 Day Average as published by the Federal Reserve Bank of New York’s website (0.099% as of the Closing Date) plus 3.70%, with a floor of 3.75% […] The loan may be prepaid at any time, subject to prepayment premiums of 0.50% and 0.25% of the loan amount prepaid for prepayments during years one and two of the loan term, respectively.”

‘Accumulation’ is Saylor’s ultimate business strategy

MicroStrategy wrote in the PR that it will use the loan to increase the size of its Bitcoin stash. Some of the funds would also go into settling expenses such as cover fees.

“The SEN Leverage loan gives us an opportunity to further our position as the leading public company investor in Bitcoin. Using the capital from the loan, we’ve effectively turned our bitcoin into productive collateral, which allows us to further execute against our business strategy, CEO Michael Saylor noted.

MicroStrategy has been adding more of the asset to its balance sheet for nearly two years through various business plays. The firm made its first purchase in August 2020 before completing a series of several acquisitions in the ensuing months. By the start of this year, the analytics and business intelligence company had roughly 124,391 bitcoins.

In addition to the sizeable pie, it arguably cleared the path for more institutions to get in on the same. Its buys were followed by the entry of other renowned companies, including Tesla and Block, into the Bitcoin market.

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Author: Sam Grant