MicroStrategy secures $205M Bitcoin-collateralized loan to buy more BTC
Saylor said that Silvergate’s innovative loan product allowed his firm to execute its crypto strategy more effectively and buy more crypto by using its existing stash as leverage.
Thu, 31 Mar 2022, 16:18 pm UTC
MicroStrategy is known for its bullish stance on Bitcoin and for being the top publicly-traded company with the largest BTC holdings. The company is about to embark on another acquisition spree once more and has already secured the necessary funding by using some of its BTC as collateral for a loan.
MicroStrategy CEO Michael Saylor has announced his firm’s latest move via a post on social media. “MacroStrategy, a subsidiary of MicroStrategy, has closed a $205 million bitcoin-collateralized loan with Silvergate Bank to purchase #bitcoin,” Saylor wrote on a March 29 Twitter post.
In a post on Tuesday, MicroStrategy announced that Silvergate Bank has issued a $205 million term loan under its Silvergate Exchange Network (SEN) Leverage program to MacroStrategy. The loan, which is collateralized by some Bitcoin owned by MacroStrategy, will be used to purchase more BTC.
“The interest-only term loan is secured by certain bitcoin held in MacroStrategy’s collateral account with a custodian mutually authorized by Silvergate and MacroStrategy,” MicroStrategy said. “Under the terms of the agreement, MacroStrategy will use the loan proceeds (i) to purchase bitcoins, (ii) to pay fees, interest, and expenses related to the loan transaction, or (iii) for MacroStrategy’s or MicroStrategy’s general corporate purposes.”
The value of the Bitcoin used as collateral for the loan is around $820 million, according to Beincrypto.com. MicroStrategy's sizable BTC stash is over 0.5% of the total Bitcoin supply.
“As of January 31, 2022, the Company held approximately 125,051 bitcoins that were acquired at an aggregate purchase price of $3.78 billion and an average purchase price of approximately $30,200 per bitcoin, inclusive of fees and expenses,” the company announced in February.
Saylor said that Silvergate’s innovative loan product allowed his firm to execute its crypto strategy more effectively and buy more crypto by using its existing stash as leverage. “The SEN Leverage loan gives us an opportunity to further our position as the leading public company investor in bitcoin,” the CEO said. “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.”
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