There was some speculation after Michael Saylor stepped down from MicroStrategy’s top job in August that the board was fed up with his borderline obsession with the Bitcoin cryptocurrency.
But it appears Saylor has as much influence over the global software company as executive chairman as CEO.
According to the filings, MicroStrategy is prepared to release up to $500 million in Class A shares on the NASDAQ stock exchange to add to its existing pile of Bitcoin, which is already the largest corporate holdings in existence.
The filing says that “we intend to use the net proceeds of this offering for general corporate purposes, including the acquisition of bitcoin,” so while we can’t be sure exactly how much of this fundraising will go specifically toward purchasing digital gold, we can hazard a guess that it will not be a trivial quantity.
The prospectus supplement adds: “Our bitcoin acquisition strategy involves acquiring bitcoin with our liquid assets in excess of working capital requirements and from time to time, subject to market conditions, issuing debt or equity securities or engaging in other capital raising transactions for the purpose of using the proceeds to purchase bitcoin .”
A specific sale date has not been given, but what is certain is that existing shareholders are likely to experience further downward price action despite the stock having already plunged over 50% year to date.
According to the prospectus: “Purchasers will experience immediate dilution in the book value per share of the Class A common stock purchased in the offering.”
Need more #Bitcoin.
— Michael Saylor⚡️ (@saylor) 10 September 2022
To justify the announcement, Saylor tweeted: “Need more #Bitcoin”
How Much Bitcoin Does MicroStrategy Own?
At current prices (which are $22,000 as of September 12), $500 million could add another 25,000 BTC to MicroStrategy’s existing supply of 129,699 BTC.
It’s worth noting that Saylor’s Bitcoins were purchased for a total purchase price of $3.8 billion at roughly $30,600 per coin, so at Bitcoin’s current trading value, MicroStrategy’s BTC holdings have caused nearly a billion in realized losses.
Not that the company seems too bothered.
Holding Bitcoin now accounts for 50% of the Virginia-based company’s vision, at least according to the company’s prospectus summary: “MicroStrategy® pursues two corporate strategies in operating its business.
“One strategy is to acquire and hold bitcoin, and the other strategy is to grow our analytics software business.
“We believe that executing these two interdependent business strategies serves as a key differentiator for our business, as our bitcoin acquisition strategy has raised our profile with potential software customers, while our analytics software business has provided stable cash flows that allow us to acquire and hold bitcoin on long term.”
Co-founder Michael Saylor stepped down as CEO in August to focus his efforts on Bitcoin advocacy and guiding MicroStrategy’s Bitcoin acquisition strategy as Executive Chairman.
Saylor is currently facing $25 million in tax evasion charges by District of Columbia Attorney General Karl Racine.
