Michael Saylor’s company MicroStrategy uses BTC as collateral to obtain a loan with which to buy more Bitcoins.
MicroStrategy’s Bitcoin Buying Strategy
Yesterday MicroStrategy announced that MacroStrategy has obtained a three-year $ 205 million loan to purchase Bitcoin, to pay commissions, interest and expenses related to the loan transaction, and for general business purposes of MacroStrategy or MicroStrategy.
MacroStrategy LLC is a subsidiary of MicroStrategy Incorporated, Michael Saylor ‘s wholly owned subsidiary.
The loan was provided by Silvergate Bank , a subsidiary of Silvergate Capital Corporation, a company listed on the NYSE under the ticker SI.
Silvergate is a provider of innovative financial infrastructure solutions and services for the crypto sector, and has issued the forward loan to MacroStrategy under its Silvergate Exchange Network (SEN) Leverage program.
The loan is backed by BTC held in the MacroStrategy collateral account.
The parent company, MicroStrategy, already owns about $ 5.9 billion in Bitcoin , and is in fact continuing to buy more thanks to its dedicated business software unit.
The document submitted to the SEC regarding this transaction shows that the loan will expire on March 23, 2025, and will accrue interest at a variable rate. Interest will instead be paid monthly.
The loan was secured with BTC worth approximately $ 820 million at the time of subscription. MacroStrategy must maintain a ratio between the amount of the loan and the value of the collateral equal to or less than 50% , or with BTC as collateral worth at least $ 410 million.
BTC used as collateral to obtain a loan that will be used in the purchase of other Bitcoins
In other words, they used Bitcoin as collateral to obtain a dollar loan with which to buy more Bitcoins.
Statements from MicroStrategy and Silvergate CEOs
MicroStrategy President and CEO Michael Saylor said:
“The SEN Leverage Loan offers us the opportunity to strengthen our position as the leading Bitcoin investor among public limited companies. Using the loan capital, we have effectively turned our Bitcoins into productive collateral, which allows us to further execute our business strategy.”
Silvergate CEO Alan Lane commented:
“We are excited to add MicroStrategy to our growing list of SEN Leverage borrowers. Their innovative approach to treasury management is an outstanding example of how institutions can use their Bitcoins to support and grow their business.”