On March 29th, 2022 MicroStrategy CEO Michael Saylor announced that MacroStrategy, a subsidiary of MicroStrategy, will use all proceeds from a Silvergate Bank loan to acquire more Bitcoin. At a current Bitcoin price of $47,500, MacroStrategy would be able to acquire around 4,315 BTC for their company balance sheet.
MicroStrategy is a publicly traded analytics and business intelligence company that has been purchasing Bitcoin as a reserve asset since August of 2020. Based on their latest filing, the company now holds over 125,000 Bitcoin on their balance sheet.
MicroStrategy revealed in their press release that the interest-only term loan is secured by Bitcoin that are held in MacroStrategy’s collateral account with Silvergate’s approval.
The terms of agreement include:
- MacroStrategy will use the loan proceeds to purchase Bitcoin.
- MacroStrategy will pay fees, interest, and all expenses related to the loan.
- MacroStrategy or MicroStrategy will use the loan proceeds for any additional corporate purposes.
CEO of Silvergate Alan Lane states that MicroStrategy’s approach to treasury management is a great example for other institutions that are looking for the best possible ways to allocate capital. He added that MicroStrategy’s corporate strategy is also an innovative way for companies to grow their business if they are unable to because of increasing inflation.
SEN Leverage, a subsidiary of Silvergate that provided the loan structure for MacroStrategy, launched in 2020 in order to provide loans for institutions that are collateralized by Bitcoin. The company currently has $570.5 million in commitments.
Saylor praised the loan structure because it gives MicroStrategy an opportunity to purchase more Bitcoin and continue to be the leading Bitcoin investment company. “Using the capital from the loan, we’ve effectively turned our bitcoin into productive collateral, which allows us to further execute against our business strategy,” said Saylor.