MicroStrategy has announced that it can sell Bitcoin (BTC) to meet its long-term debt obligations. The international software company currently holds 140,000 BTC, according to its first quarter financial results.
MicroStrategy will finance its $2.208 billion debt with Bitcoin
MicroStrategy, of which Michael Saylor is the former CEO, announced its first quarter 2023 balance sheet today. The company, which reported a profit for the first time in 9 quarters, remains the largest institutional Bitcoin whale. According to first-quarter financial results, it generated $461.2 million in revenue in the first 3 months. The company currently holds 140,000 BTC.
On the other hand, it is said that Bitcoin (BTC) can be used to finance long-term debt obligations totaling $2.208 billion, the principal of which is due by 2025. MicroStrategy has long-term cash requirements for leases, toll and various purchase contract-related obligations, according to its filing May 1.
Since @MicroStrategy adopted a #Bitcoin Strategy: pic.twitter.com/rrYTbvOkUS
— Michael Saylor⚡️ (@saylor) May 1, 2023
In the file, the company describes its debt obligations as follows:
In addition to the $2.4 million coupon interest payable every six months for the 2025 Convertible Bonds and the $15.3 million coupon interest due every six months, we have a total debt of $2,208 billion due at maturity on our long-term debt instruments. $0.1 million payable monthly principal and interest for 2028 Secured Notes and related to our other long-term secured debt.
Will try to borrow in exchange for BTC
MicroStrategy says cash and equivalents from its revenues are not enough to meet these debt obligations. Therefore, he said he will explore different options that include borrowing in exchange for BTC or selling some of his assets outright.
Other options available to the firm include refinancing debt obligations, raising cash from other sources such as issuing and selling Class A stock, and even fulfilling Convertible Bond obligations under some unnamed conditions. In such a case, MicroStrategy will have to sell Bitcoin again after December 2022.
MicroStrategy starts profiting from Bitcoin
MicroStrategy has attracted attention with its bold Bitcoin investments recently. The company has started to make a profit with Bitcoin’s rise again in the last few days.
In his filing with the SEC last week, he announced that he had purchased 1,045 Bitcoins for approximately $29.3 million between March 24 and April 4. Thus, MicroStrategy’s total acquisition is approximately $4.17 billion. The company currently holds 140,000 Bitcoins with an average purchase price of about $29,803.
Meanwhile, BTC surpasses $30,000, while MicroStrategy’s Bitcoin balance reaches over $4.2 billion. This shows that the company can quickly recoup its losses in recent months in a potential rally. As we have quoted as Kriptokoin.com, some analysts expect results in the opposite direction.
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