Key Takeaways

  • MicroStrategy’s convertible debt offerings provide bond investors with a way to get exposure to BTC – albeit more indirectly – unlocking new bitcoin investor types and paving the way for similar offerings to come.

  • Assuming all ~$1 billion of the proceeds go to purchasing more BTC, at current prices MicroStrategy would acquire another ~19,230 bitcoin, bringing its total holdings to ~90,310, or ~$4.7 billion.

  • These convertible notes offer an asymmetric bet for bond investors; they gain exposure to BTC’s upside potential with far less downside risk than simply holding bitcoin outright.

  • Historically low interest rates coupled with seemingly insatiable investor demand for junk bond offerings creates the perfect storm for more companies to follow the MicroStrategy blueprint.

MicroStrategy announced a $600 million convertible debt sale yesterday with the intent to “use the net proceeds from the sale of the notes to acquire additional bitcoins.” But just this morning, the software company increased the sale to $900 million with an additional option for $150 million more depending on demand. The notes carry a 0% coupon, essentially making them a pure bet on the increased value of MicroStrategy’s bitcoin holdings.

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