MicroStrategy Takes Out a $205 Million Bitcoin-Secured Loan To Invest in More Bitcoin

MicroStrategy CEO Michael J. Saylor confirmed today on Twitter that the company had obtained a loan to purchase more Bitcoins.

According to the press statement, Silvergate Bank provided MacroStrategy LLC, a MicroStrategy subsidiary, with a $205 million interest-only term loan. Which is effectively a Bitcoin-collateralized loan for the purpose of obtaining more Bitcoin.

This implies that the loan is backed by Bitcoin kept in MacroStrategy’s collateral account with a custodian that both Silvergate and MacroStrategy have mutually authorized.

According to the stock exchange announcement, the value of the collateral for the non-guaranteed loan is about $820 million worth of Bitcoin.

It’s worth mentioning that, with 125,051 tokens, MicroStrategy is now the largest public corporation to have more than 0.5% of the entire Bitcoin supply. According to estimates by Bitcoin Treasuries, Bitcoin accounts for 102% of MicroStrategy’s entire market worth at the time of writing.

MacroStrategy intends to utilize the new loan not just to buy more Bitcoins, but also to pay fees and interest associated with loan transactions and other corporate reasons of the two firms.

“The SEN Leverage loan allows us to strengthen our position as the leading public company bitcoin investor,” Saylor stated.

Furthermore, the corporation will use the funds to convert Bitcoin into a useful kind of collateral for the company. The SEC’s Credit and Security Agreement allows for such an arrangement. The loan expires on March 23, 2025, and has a variable rate of interest, according to the securities regulator’s website.

Alan Lane, Chief Executive Officer of Silvergate commented:

“We’re thrilled to add MicroStrategy to our growing list of SEN Leverage borrowers. Their innovative approach to treasury management is an exceptional example of how institutions can utilize their bitcoin to support and grow their business.”

Saylor, on the other hand, has long been a proponent of Bitcoin.

His Bitcoin stockpiling, on the other hand, has its critics. Last year, crypto pundit Mr.Whale said that the corporation he leads is “dumping” its shares to a “shady LLC.”

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Patrick

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