MicroStrategy, a Bitcoin development company, plans to sell a record-breaking $21 billion in new shares to increase its Bitcoin inventory. This amount surpasses Tesla’s $10 billion in 2020 and marks the largest transaction to date. MicroStrategy CEO Phong Le also explained the uniqueness and importance of 21 in the Bitcoin world.
MicroStrategy’s software business is still losing money, and they plan to raise an additional $42 billion in the next three years to further invest in Bitcoin.
MicroStrategy’s new share plan exceeds Tesla
According to Bloomberg, MicroStrategy’s at-the-market offering to sell common stock far surpasses the amount Elon Musk’s Tesla raised four years ago.
MicroStrategy has already raised over $3.5 billion through various fundraising activities this year, making this equity plan particularly noteworthy. The $21 billion is currently the largest transaction globally.
Bloomberg data shows that Tesla raised $10 billion through two separate transactions in over three months in 2020, while healthcare REIT Welltower Inc. raised over $11 billion over several years. This method of selling stocks through at-the-market offering involves hiring brokerage firms and applying for a total amount to the U.S. Securities and Exchange Commission (SEC) to raise funds when needed.
For MicroStrategy, selling stocks and convertible bonds to purchase Bitcoin is crucial to their business. According to their latest financial report, MicroStrategy has used $4.3 billion in convertible bonds and $4.3 billion in new shares to buy Bitcoin. As of October 29, they hold a total of 252,220 Bitcoins at an average cost of $39,266 per Bitcoin.
Why $21 billion?
MicroStrategy announced the “21/21 Plan,” aiming to raise $42 billion in capital over the next three years, including $21 billion in equity and $21 billion in fixed-income securities. This plan will further support their Bitcoin acquisition as part of their treasury reserve strategy.
MicroStrategy CEO Phong Le stated that part of the reason for this number is related to the science fiction novel “The Hitchhiker’s Guide to the Galaxy,” where a supercomputer calculates the answer to life, the universe, and everything as the number 42. During the earnings call, he said:
“We believe that this is a unique number with some special features. It is the sum of 21 plus 21. We all know that 21 is a magical number in the Bitcoin world, with a maximum circulation of only 21 million Bitcoins.”
Recently, MicroStrategy’s move has sparked discussions in the market, with Peter Schiff, known as the gold bull, mocking MicroStrategy’s lack of profitability and Bitcoin as an old scam in new packaging.
