MicroStrategy Plans to Increase BTC Holding by Selling Class A Shares Worth $500m

MicroStrategy Inc plans to increase its bitcoin holdings through the net proceeds of its sale of up to $500 million worth of its class A shares.

The Tysons business software firm indicated their plan in September 9 filings with the Securities and Exchange Commission. It disclosed a sales deal with Cowen and Company LLC and BTIG LLC to sell those shares from "time to time."

SEC filings say the proceeds will be used for "general corporate purposes, including the acquisition of bitcoin."

According to the company, the new stock sale deal will not require MicroStrategy to issue any minimum offering amount. It further indicated in public filings that it expects to spend some of the proceeds on bitcoin purchases, but it did not make any promises about holding onto those purchases.

"We expect to purchase additional bitcoin in future periods, including with the net proceeds from this offering," the company wrote.

The firm "may also sell bitcoin in future periods as needed to generate cash and cash equivalents and short-term investments for treasury management purposes," the company wrote.

As of September 8, MicroStrategy held 129,699 bitcoins, whose market value at the time was worth well north of $2 billion.

The move has come a month after Michael Saylor - founder and Chairman of MicroStrategy - decided to step down as CEO. 

However, the company’s stock price is heavily affected by the rise and fall of the bitcoin price. The company has lost more than half its value since the beginning of the year — it stood at roughly $223 as of 3:00 pm Wednesday.

It is unknown how many bitcoin purchases the company has made since the end of June. However, it reported to the SEC that it had spent $10 million to buy 480 bitcoins between May 3 and June 28 - a small buy by the company’s standards. 

In the first six months of 2021, MicroStrategy spent $1.6 billion to buy 34,616 bitcoins. According to SEC filings, the company purchased only 5,308 bitcoins in the first half of 2022.

The company has been looking to increase capital for bitcoin purchases over the past two years. In March 2022, a MicroStrategy subsidiary formed specifically to hold most of its bitcoin took on a $205 million loan to finance more purchases.

The company previously funded its bitcoin purchases with $1 billion in stock sales per an open-market sale agreement made in June 2021 with New York investment bank Jefferies LLC.

The total revenue of MicroStrategy for the second quarter of 2022 was $122.1 million - a decrease from $125.4 million during the same quarter a year earlier.

While the company recorded a net loss of $1.2 billion compared to $409.4 million during the second quarter of 2021.