Microstrategy repays its $205 million Silvergate loan early and invests $150 million more in Bitcoin, strengthening its crypto position.
Microstrategy Incorporated, a prominent business intelligence company, announced the full repayment of its $205.0 million term loan from Silvergate Bank, further expanding its Bitcoin holdings. The loan, initially secured by MacroStrategy, a wholly-owned subsidiary of Microstrategy, was due to mature on March 23, 2025. By repaying the loan in full, Microstrategy has strengthened its position in the cryptocurrency market and demonstrated its commitment to Bitcoin.
On March 24, 2023, MacroStrategy entered into a Prepayment, Waiver, and Payoff to Credit and Security Agreement with Silvergate Bank, voluntarily prepaying approximately $161.0 million, the total amount due for the loan. Then, this payment satisfied and discharged all obligations under the Credit Agreement, terminating it and releasing Silvergate’s security interest in MacroStrategy’s assets. The collateral for the loan, which included around 34,619 bitcoins, was released back to MacroStrategy.
Moreover, Microstrategy’s decision to repay the Silvergate loan early showcases the company’s confidence in Bitcoin and its strategic focus on expanding its cryptocurrency portfolio. Between February 16, 2023, and March 23, 2023, Microstrategy and its subsidiaries acquired an additional 6,455 bitcoins at an average price of $23,238 per Bitcoin. This investment, totaling around $150.0 million, increased the company’s overall Bitcoin holdings to approximately 138,955 coins.
Strategic Expansion of Microstrategy’s Bitcoin Portfolio
The company has invested a total of $4.14 billion in Bitcoin, with an average purchase price of $29,817 per coin, inclusive of fees and expenses. Microstrategy’s sizable investment in the cryptocurrency market highlights the growing acceptance of Bitcoin as a viable asset for major corporations.
To fund the prepayment of the Silvergate loan, Microstrategy issued and sold 1,348,855 shares of its class A common stock under a Sales Agreement with Cowen and Company, LLC, and BTIG, LLC. Furthermore, the sale of these shares raised net proceeds of approximately $339.4 million for the company between January 1, 2023, and March 24, 2023. The funds generated from the share sales, along with the $5.0 million in cash held by MacroStrategy at Silvergate, were used to repay the loan in full.
The early repayment of the Silvergate loan demonstrates Microstrategy’s strong financial position and its commitment to leveraging its assets to maximize returns. Hence, by repaying the loan early, the company has freed up its collateral, providing additional flexibility to capitalize on future opportunities in the cryptocurrency market.
Microstrategy’s strategic investment in Bitcoin signifies a growing trend among corporations to diversify their holdings with cryptocurrencies, bolstering the legitimacy and acceptance of digital assets in the mainstream financial world. The company’s proactive approach to managing its debt and increasing its investment in Bitcoin highlights its dedication to staying at the forefront of this rapidly evolving market.
The company’s actions have not only strengthened its position in the market but have also further legitimized the adoption of digital assets by major corporations.