MicroStrategy CEO Michael J. Saylor confirmed on Twitter today that the business has obtained a loan in order to buy further Bitcoins.
According to the statement, Silvergate Bank provided MacroStrategy LLC, a subsidiary of MicroStrategy, with a $205 million interest-only term loan. Which is effectively a Bitcoin-collateralized loan for the purpose of acquiring further Bitcoin.
This implies that the loan is backed by specific Bitcoin kept in MacroStrategy’s collateral account with a custodian that Silvergate and MacroStrategy have mutually approved.
According to the stock market statement, the security for the unguaranteed loan is about $820 million in Bitcoin.
Notably, MicroStrategy is already the biggest public corporation to own more than 0.5 percent of the entire Bitcoin supply, with 125,051 tokens. Bitcoin accounts for 102 percent of MicroStrategy’s entire market capitalization at the time of writing, according to Bitcoin Treasuries estimates.
MacroStrategy intends to utilise the new loan not just to acquire more Bitcoins, but also to pay fees and interest associated with loan transactions and other business objectives of the two firms.
“The SEN Leverage loan enables us to strengthen our position as the premier public business investor in bitcoin,” Saylor said.
Additionally, the corporation will use the funds to convert Bitcoin into a useful form of collateral for the business. This kind of agreement is permitted under the SEC’s Credit and Security Agreement. According to the securities regulator’s website, the loan expires on March 23, 2025, and has a fluctuating rate of interest.
“We’re happy to welcome MicroStrategy to our expanding roster of SEN Leverage borrowers,” said Alan Lane, Chief Executive Officer of Silvergate. Their forward-thinking approach to treasury management exemplifies how institutions may use bitcoin to support and expand their businesses.”
Having said that, Saylor has been a vocal supporter of Bitcoin for a long period of time. However, his Bitcoin amassing is not without detractors. Mr.Whale, a cryptocurrency analyst, said last year that the business he leads is “dumping” its shares to a “shady LLC.”