The bond issuance is the latest example of the company raising funds through borrowing and investing those funds in cryptocurrency. The issuance, which is expected to close on June 17, 2024, is an important step in MicroStrategy’s investment strategy.

MicroStrategy has established itself as one of the companies most invested in Bitcoin. The company currently holds 214,400 Bitcoins, the largest amount held by an institutional entity outside of the massive treasury backing BlackRock’s spot Bitcoin ETF. This passion has become a core element of MicroStrategy’s investment strategy.

The bonds offered by the company offer an annual interest rate of 2.25% and are due until 2032. Investors may repay the bonds at maturity, but MicroStrategy also has the option to repurchase them early or convert them into another investment.

What’s more interesting is the conversion rate. MicroStrategy is offering investors 0.4894 shares of MicroStrategy Class A common stock for every $1,000 worth of notes. This represents a price of approximately $2,043.32 per share, yielding a 35% premium over the closing price of the company’s stock on Thursday, June 13, 2024.

With this move, MicroStrategy aims to offer investors an attractive return opportunity. However, investors must also take risks into account when making their decisions. The cryptocurrency market is highly volatile and the Bitcoin price can fluctuate significantly. This brings with it the risk that investors will incur losses if they convert the bonds into MicroStrategy stock.

In announcing the $700 million raise, MicroStrategy also stated that it was offering qualified institutional investors the option to purchase an additional $100 million in bonds. This situation underlines the company’s desire to raise funds through borrowing.

It’s also worth noting that MicroStrategy previously announced it would repay $650 million of convertible bonds maturing in 2025. This repayment will be accompanied by the satisfaction of requests to convert the bonds into MicroStrategy stock. The repayment date has been determined as July 15, 2024.

MicroStrategy plans to use the proceeds from the $700 million bond issuance, along with a total of $786 million in funds if the additional $100 million option is fully exercised, to purchase additional Bitcoin, an amount exceeding $687.8 million, according to its estimates. This move clearly demonstrates MicroStrategy’s belief in Bitcoin and its long-term investment strategy.

However, this approach of MicroStrategy causes controversy in the financial world. Some experts argue that the company’s excessive investment in Bitcoin could be risky in the long run. The high volatility of the cryptocurrency market and regulatory uncertainties may cause MicroStrategy’s investments to lose value.

On the other hand, some experts think that MicroStrategy has a pioneering approach to Bitcoin. Believing in the future potential of Bitcoin, these experts argue that MicroStrategy’s investment can provide high returns in the long term.