The company requested at least a $200 million loan from Silvergate secured by 15% of its current Bitcoin holdings value.
MicroStrategy, the publicly traded business software company, is leveraging its Bitcoin (BTC) holdings to buy even more bitcoin.
The firm, managed by Michael Saylor, took a $205 million Bitcoin-secured loan from crypto-friendly Silvergate Bank. MicroStrategy, a subsidiary of MicroStrategy, applied for and obtained the loan. The entity now intends to use the cash to include more bitcoin to its balance.
CoinDesk created the loan through the Silvergate Exchange Network (SEN) leverage program, which manages US dollar loans supported by Bitcoin. The loan got secured with around $820 million in bitcoin.
Bitcoin Loan to Acquire More Bitcoins
On previous occasions, Saylor revealed the news through a statement published on his Twitter account. According to the official information, the entity will use the loan to purchase bitcoins, pay fees, interest, and expenses related to the transaction, and for general MicroStrategy corporate purposes.
“The SEN Leverage Loan provides an opportunity to improve MicroStrategy’s position as the leading public company investing in Bitcoin,” Saylor commented. He also stated that the firm effectively turns its Bitcoin holdings into collateral productivity with the loan capital, allowing the company to further carry out the business plans.
MicroStrategy became the most prominent institutional Bitcoin whale, which refers to a vast investor in digital assets. Since the end of 2020, the firm has been leading an aggressive campaign to purchase bitcoins through cash and debt. The company made its last purchase in February of this year.
According to reports after the latest acquisition, MicroStrategy came to amass at least 125,051 BTC. The figure got currently valued at 5.9 billion US dollars. This price means that the loan brought by Silvergate got guaranteed for only a piece valued at less than 15% of the dollar value of the total bitcoins housed by the entity.
With headquarters in California and over 30 years old, Silvergate Bank is a financial entity known for serving businesses in the digital industry. The bank revealed the SEN protocol in 2020 to grant institutions access to BTC-supported USD loans. The program has given loans of this type valued at USD 570 million.
The US-listed company has an aggressive crypto investment strategy, which started two years ago. The entity is famous for acquiring vast amounts of Bitcoin funds and made this activity a routine for the company, which added nearly 9,000 bitcoins to its holdings in the third quarter of 2021 alone, an average of 3,000 coins per month.
The strategy, which usually benefits from market declines to purchase more assets, has made MicroStrategy one of the largest institutional investors in Bitcoin. Saylor, a strong proponent of the flagship cryptocurrency, has noted that the strategy is to leverage Bitcoin to hedge against the inflation of fiat currencies such as the dollar.
By: Jenson Nuñez
