The company maintains that despite the volatility, it will continue to buy Bitcoin.
MicroStrategy announced that it has reached an agreement with Cowen and Company, LLC and BTIG, LLC, to sell Series A shares, to raise up to $500 million, which will be used to purchase more Bitcoin (BTC).
In its document sent to the United States Securities and Exchange Commission (SEC), MicroStrategy explained that it will issue up to 11,474,290 shares at a price of $234.50 per share, a price set by the Nasdaq Global Select Market on September 8.
“We intend to use the net proceeds from this offering for general corporate purposes, including the acquisition of Bitcoin, unless otherwise stated in the applicable prospectus supplement. We have not determined the number of net proceeds that will be used specifically for any particular purpose.”
Details of the Purchase
MicroStrategy detailed that as of September 08, it had 129,699 BTC which were purchased at a total purchase price of $3.977 billion and an average purchase price of approximately 30,664 per Bitcoin. Additionally, 14,589 of your BTCs are held by MicroStrategy Incorporated directly and 115,110 of the BTCs are held by MacroStrategy LLC, so 14,589 BTCs held directly by MicroStrategy Incorporated serve as collateral for senior notes.
“We expect to purchase additional BTC in future periods, including with the net proceeds from this offering as described in Use of Proceeds, although we may also sell Bitcoins in future periods as needed to generate cash and cash equivalents and short-term investments for treasury management purposes.”
MicroStrategy Advances That It Will Continue Buying More BTC
The last BTC purchase by MicroStrategy was on June 29, when the company revealed that it bought 480 Bitcoin (BTC) for $10 million. Thus, the new purchase becomes the first since April, when MicroStrategy acquired 4,167 BTC weeks before the cryptocurrency market crash.
The MicroStrategy purchase came amid a prolonged bear market which, according to Glassnode, is the most significant in history. At the beginning of the month of June, Bitcoin was trading at approximately $31,500. However, following the cryptocurrency market crash, the largest cryptocurrency by capitalization fell to levels not seen since 2020.
MicroStrategy clarifies in its letter to the SEC that the number of Class A common shares that will be outstanding immediately following this offering, as shown in the letter, is based on 9,342,094 shares outstanding as of September 7, 2022.
However, the company clarifies the following:
“Our management may not apply our net proceeds in a way that will ultimately increase the value of your investment. Our management’s failure to apply these funds effectively could harm our business. If we do not invest or apply the net proceeds of this offering in a manner that enhances shareholder value.”
It further explains that future fluctuations in Bitcoin trading prices may result in Bitcoin purchased with the net proceeds of this offering being converted into cash with a value substantially less than the net proceeds of this offering.
By Audy Castaneda
