They plan to use the additional capital to purchase more bitcoin as a treasury reserve asset.
The company’s goal is to achieve a higher return on its bitcoin reserves.
Software development company MicroStrategy announced a plan to raise $42 billion over the next three years. The company plans to use this capital to acquire more bitcoin (BTC) as a reserve asset, with the aim of increasing the return on its treasury.
MicroStrategy’s focus remains on “increasing the value generated” for its shareholders “by leveraging the digital transformation of capital,” as detailed in the presentation. As part of this strategy, the company launched the “21/21 Plan,” which includes raising $21 billion in equity and another $21 billion in fixed-income securities.
Michael Saylor, CEO of MicroStrategy, explained in a post on X that the plan includes a stock offering at market price for $21 billion and a goal of raising $21 billion in fixed income securities.
Phong Le, president and CEO, indicated in the results presentation that as a bitcoin treasury company, they plan to use the additional capital to purchase more bitcoin as a treasury reserve asset. “In a way that allows us to achieve higher performance,” he said.
In the presentation, Andrew Kang, the company’s chief financial officer, highlighted that, during the third quarter, which he described as “transformative,” MicroStrategy raised $2.1 billion in equity and debt.
“Through our treasury strategy, we increased our bitcoin holdings by 11% in the quarter, increased our year-to-date BTC yield to 17.8%, and reduced our total annualized interest expense by $24 million. ”Kang said.
MicroStrategy is reviewing its long-term goal “to achieve an annual BTC return of 6% to 10% between 2025 and 2027.” As of September 30, 2024, the book value of the company’s digital assets, composed of approximately 252,220 bitcoinwas USD 6,851 million.
The original cost basis and market value of these bitcoins were USD 9,904 million and USD 16,007 million, respectively, reflecting an average cost per bitcoin of approximately USD 39,266 and a market price per bitcoin of USD 63,463.
A strategy followed and questioned
Saylor’s strategy of acquiring BTC massively since it is a long-term store of value, has been followed by other companies, such as the Japanese Metaplanet, which also buys bitcoin on a recurring basis, already reaching 1,000 BTC on average, as reported CryptoNews.
Although this strategy has been largely applauded by the bitcoin community, it has not been without criticism. Analyst Mike Fay suggested that MicroStrategy buys bitcoin in the hope that its price will continue to rise in the long term, which would increase the value of the company’s shares. This, while undertaking a financial strategy with many risks.
Recently, MicroStrategy shares have approached all-time highs, coinciding with an increase in the price of BTCwhich is trading above USD 72,000 at the close of the report, according to TradingView data.
This move by MicroStrategy not only reflects a firm commitment to bitcoin as a store of value, but also highlights the trends of companies towards digital assets, in the midst of a rapidly changing financial market.
