Strategy (Formerly MicroStrategy) Plans to Raise $21 Billion for Bitcoin Purchases
Key Takeaways:
- Strategy, formerly known as MicroStrategy, aims to raise $21 billion through a preferred stock offering to acquire more Bitcoin.
- The company plans to conduct these share sales gradually and strategically over time.
- Bitcoin’s price experienced a brief surge following the announcement, but Strategy’s stock remains in the red.
Strategy’s $21 Billion Bitcoin Investment Plan
In a major development, Strategy (previously MicroStrategy) has unveiled plans to raise $21 billion to expand its Bitcoin holdings. The company intends to generate this capital by issuing preferred stock, as per its latest announcement. Despite the news, Strategy’s stock (MSTR) continues to trade lower.
Details of the Fundraising Strategy
According to a press release, Strategy has entered into a sales agreement to issue and sell shares of its 8.00% Series A perpetual strike preferred stock, with a nominal value of $0.001 per share, totaling $21 billion.
The company clarified that it will execute these share sales gradually through an at-the-market (ATM) program, factoring in stock prices and trading volumes at the time of each sale.
Strategy has stated that the funds raised will be used for general corporate expenses, including further Bitcoin acquisitions and operational capital.
This announcement follows a rare pause in the company’s regular Bitcoin purchasing activity. Strategy has been consistently buying BTC almost every week since the beginning of the year. The firm, led by Michael Saylor, currently holds 499,096 BTC, acquired for approximately $33.1 billion at an average purchase price of $66,357 per Bitcoin.
Market Reaction to the Announcement
Despite the news, MSTR stock has not reacted positively and remains down over 5% in pre-market trading, currently priced at around $271. Over the past month, the stock has dropped more than 14%.
Meanwhile, Bitcoin’s price briefly spiked to $84,000 following the announcement, reflecting a bullish sentiment toward the cryptocurrency. However, since Strategy typically acquires Bitcoin through over-the-counter (OTC) transactions, the immediate impact on BTC prices is expected to be limited.
Crypto analyst Ali Martinez noted that major crypto investors, similar to Strategy, are taking advantage of the market dip to accumulate more Bitcoin. Reports suggest that whales have purchased over 22,000 BTC in the last 72 hours.
