MicroStrategy, the Bitcoin development company, announced its third-quarter financial report, revealing a continued increase in its Bitcoin purchases. The total Bitcoin holdings amount to 252,220, with an average cost of $39,266 per Bitcoin, resulting in an unrealized profit of up to $8.3 billion. MicroStrategy stated that it plans to raise an additional $42 billion in capital over the next three years to further support its Bitcoin acquisitions.
MicroStrategy to Raise $42 Billion Over the Next Three Years
MicroStrategy unveiled its “21/21 Plan,” aiming to raise $42 billion in capital over the next three years, which includes $21 billion in equity and $21 billion in fixed-income securities. This plan will further support its Bitcoin acquisitions as part of its treasury reserve strategy.
Year-to-date, its “Bitcoin yield” stands at 17.8%, with the future three-year target adjusted from an annual range of 4%-8% to 6%-10%.
Strengthening MicroStrategy’s Capital Structure
MicroStrategy is strengthening its capital structure through the following actions:
Issuing $1.01 billion of convertible senior notes due in 2028 and $1.1 billion of Class A common stock
Repaying $500 million of senior secured notes due in 2028 (with an interest rate of up to 6.125%) and releasing all collateral securing these notes (Bitcoin)
Annual fixed interest expenses have significantly decreased from $59 million to approximately $34.6 million. All adjusted debt is convertible debt, with an average interest rate of only 0.811%.
(MicroStrategy issued new debt to repay old debt and purchased an additional 7,420 Bitcoins)
Software Business Losses, No Fair Value Recognition of Bitcoin
MicroStrategy’s software business continues to show losses, with revenues declining by 10.3% year-over-year to $116.1 million. The operating loss reached $18.5 million.
This time, MicroStrategy recognized up to $412.1 million in digital asset impairment and did not use fair value to recognize the value of Bitcoin. Therefore, although Bitcoin has risen to $72K, resulting in an unrealized profit of $8.3 billion, it is not reflected in MicroStrategy’s financial statements.
MSTR Up 257% This Year
MicroStrategy’s stock price has surged by 257% this year, outperforming Bitcoin’s 70% increase. Following a 10-for-1 stock split in early August, the stock price quickly rose to $247.
