MicroStrategy, a software company, is causing a stir in the world of cryptocurrency. A recent research report by analysts at Bernstein has revealed the “miracle” of MicroStrategy – how they manage to acquire such a large amount of Bitcoin (BTC).
Gautam Chhugani and Mahika Sapra, analysts at Bernstein, highlighted that MicroStrategy has been successful in creating institutional demand for Bitcoin convertibles. The company has raised a remarkable $4 billion through convertible bonds, solely for the purpose of purchasing more Bitcoin. Currently, MicroStrategy, led by Michael Saylor, holds 214,400 BTC valued at around $14.5 billion. The firm began acquiring BTC as a reserve asset in 2020, and according to the analysts, no other company has a strategy that can attract capital on such a large scale.
MicroStrategy’s unique approach to managing its finances involves a long-term convertible debt strategy that allows it to benefit from potential increases in the price of Bitcoin while limiting the risk of liquidation of the cryptocurrency on its balance sheet. When the price of Bitcoin rises, the company can issue new bonds, and when the value of crypto declines, they may issue new shares to reduce leverage.
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