MicroStrategy, the leading business intelligence firm based in Virginia, has disclosed its plans to roll out a private offering to raise $600M funds in convertible senior notes for qualified institutional investors. The proceeds will then be used to buy even more Bitcoins according to the current plans of the company. Following this bitcoin purchase from the proceeds of the private offering, MicroStrategy’s total bitcoin holdings will stand out to $1.6 billion.
The convertible senior notes will either be convertible into cash or will be convertible into the shares of the company’s class A common stock or even both if required. Convertible senior notes are low-risk bonds that need to be paid out before debts in case the issuer goes bankrupt. Along with these convertible senior notes, qualified institutional investors will also have the option to purchase an additional $90 million fund along with the principal amount of the notes.
With cryptocurrencies gaining more traction, leading firms are coming forward to invest in bitcoins. MicroStrategy is one of those early firms that acknowledged bitcoin as a reliable investment and a “store of value.” This is the second time that the company is trying to raise funds and pump its bitcoin holdings. Earlier, the company led by Michael Saylor had launched a $400M private offering in convertible senior notes. To motivate people’s sentiment towards bitcoin, Saylor himself takes out time to educate investors on the benefits of hedging with Bitcoin. He even hosted a 12-hour course dubbed “Bitcoin for Everybody” to educate investors about Bitcoin’s potential. He believes that the mainstream adoption of bitcoin is not too far.
Despite his advocacy for the mainstream adoption of Bitcoin, Saylor is not against regulations. He strongly believes that proper regulations are mandatory for the corporate adoption of bitcoin and that it will help legitimize the cryptocurrency industry by encouraging more institutional investors to participate.
According to the bitcoin bull (as he is sometimes called), Michael Saylor, bitcoin appears to be more compelling as a store-of-value as compared to other traditional stores of value like gold. This might be because bitcoin, as well as other leading cryptocurrencies, yield higher returns than traditional assets like gold. Another important factor that goes in favor of bitcoin is that bitcoin serves as a perfect hedge against inflation when compared to gold, as it has a finite supply that is capped at 21 million.
As more firms like MicroStrategy come forward to increase their bitcoin holdings, more and more institutional investors would start showing interest in Bitcoins, which will lead the cryptocurrency to soar high, well above its bullish momentum.