There was some speculation following Michael Saylor’s stepping down from MicroStrategy’s top post in August that the board was getting fed up with his borderline obsession over the Bitcoin cryptocurrency.
But going by recent filings with the Securities and Exchange Commission (SEC), it seems like Saylor maintains as strong an influence over the global software corporation as executive chairman as he did chief executive officer.
According to the filings, MicroStrategy is prepared to release up to US$500mln in Class A common shares on the NASDAQ exchange to add to its existing pile of Bitcoin, which is already the largest corporate holding in existence.
The filing states that “we intend to use the net proceeds from this offering for general corporate purposes, including the acquisition of bitcoin,” so while we can’t be sure exactly how much of this fundraise will go specifically to purchasing digital gold, we can hazard a guess that it won’t be a trivial amount.
The prospectus supplement adds: “Our bitcoin acquisition strategy involves acquiring bitcoin with our liquid assets that exceed working capital requirements, and from time to time, subject to market conditions, issuing debt or equity securities or engaging in other capital raising transactions with the objective of using the proceeds to purchase bitcoin.”
A specific sale date has not been given but what is certain is that existing shareholders will likely experience further downside price action despite shares already plummeting over 50% year to date.
As per the prospectus: “Purchasers will experience immediate dilution in the book value per share of the class A common stock purchased in the offering.”
Needs more #Bitcoin.Justifying the announcement, Saylor Tweeted: “Needs more #Bitcoin”— Michael Saylor⚡️ (@saylor) September 10, 2022
How much Bitcoin does MicroStrategy own?
At current prices (being US$22,000 as of September 12), US$500mln could add an extra 25,000 BTC to MicroStrategy’s existing supply of 129,699 BTC.
It’s worth noting that Saylor’s Bitcoins were bought for an aggregate purchase price of US$3.8bln at approximately US$30,600 per coin, so with Bitcoin’s current trading value, MicroStrategy’s BTC holdings have caused nearly a billion in realised losses.
Not that the company seems too bothered.
Holding Bitcoin now comprises 50% of the Virginia-based corporation’s vision, at least according to the company’s prospectus summary: “MicroStrategy® pursues two corporate strategies in the operation of its business.
“One strategy is to acquire and hold bitcoin and the other strategy is to grow our enterprise analytics software business.
“We believe that undertaking these two, interdependent corporate strategies serves as a key differentiator for our business, as our bitcoin acquisition strategy has raised our profile with potential software customers while our enterprise analytics software business has provided stable cash flows that allow us to acquire and hold bitcoin for the long-term.”
Co-founder Michael Saylor stepped down as chief executive officer in August to focus his effort of advocating for Bitcoin and guiding MicroStrategy’s Bitcoin acquisition strategy as executive chairman.
Saylor is currently facing allegations of tax avoidance to the tune of US$25mln by the District of Columbia’s attorney general Karl Racine.