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MicroStrategy Considers Selling Bitcoin Holdings to Address Debt Obligations

MicroStrategy may sell BTC to cover $2.2 billion in principal due by 2025.

Wed, 03 May 2023, 04:07 am UTC

Business intelligence platform MicroStrategy has announced that it may sell some of its Bitcoin (BTC) holdings to address its long-term debt obligations.

In a filing on May 1, MicroStrategy revealed that it has obligations related to operating leases, transition tax, and several purchase agreements that will require a total of $2.208 billion in principal by 2025.

The company stated that it does not expect the cash generated by its enterprise analytics software business to cover these debt obligations. Therefore, MicroStrategy is exploring different options, including borrowing against its BTC or selling some of its holdings to settle the debt obligations.

In addition, MicroStrategy's options for addressing its debt obligations include refinancing the debt, sourcing cash from other sources, and settling the Convertible Notes obligations under certain unnamed conditions.

Last December, MicroStrategy reportedly sold some of its BTC holdings for the first time since it began accumulating the digital asset. The company stated that it sold the assets to generate tax benefits. However, it has since been accumulating BTC holdings, with its first-quarter purchases pushing its total Bitcoin holding to 140,000 BTC, which is more than the now-defunct cryptocurrency exchange, Mt. Gox.

Moreover, MicroStrategy's Bitcoin acquisition approach has attracted several traditional financial institutions, who have bought the company's stocks to gain indirect exposure to the flagship digital asset.

According to the company's chairman, Michael Saylor, the shares of the company have risen by 166% since it adopted the BTC standard in 2020, outperforming other assets such as gold, Nasdaq, and S&P 500.

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