(Bloomberg) – MicroStrategy is accelerating its pace of Bitcoin purchases by increasing the value of the convertible bonds it is selling by nearly 50% to finance additional purchases of the cryptocurrency.
The software maker, which now calls itself a , is moving quickly to meet its goal announced last month of raising $42 billion in capital over the next three years to buy more Bitcoin. MicroStrategy announced on Monday (18) that it acquired a record US$4.6 billion in tokens, financed through an in-market share sale program. The company will use the $2.6 billion raised from the 0% senior note offering to increase its stock, which is already approximately $31 billion.
With renewed enthusiasm surrounding Bitcoin since cryptocurrency advocate Donald Trump won the U.S. presidential election, the purchases sent MicroStrategy shares soaring. Shares have risen more than 600% this year, which has pushed the company’s market value to more than $100 billion, putting it close to the .
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“MicroStrategy is effectively a leveraged bet on Bitcoin, and its stock’s outperformance relative to Bitcoin is the result of this approach,” said Benchmark Co. analyst Mark Palmer.
Bitcoin rose to a record high of nearly $95,000 after MicroStrategy, which is the largest publicly traded owner of Bitcoin, announced the expanded bond offering. MicroStrategy shares jumped as much as 16% to a record high of $499.35.
Demand for leveraged index funds based on the cryptocurrency-centric company also contributed to the stock’s rally. Firms offering these funds need exposure to the company, with demand for ETFs skyrocketing. The T-Rex 2X Long MSTR Daily Target ETF, which offers twice the exposure to MicroStrategy and is widely considered the most volatile fund available to U.S. investors, rose 960% while recording large capital inflows.
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Michael Saylor, co-founder of MicroStrategy, said on a conference call with analysts in October that the company plans to accelerate its treasury operations and acquire Bitcoin on an ongoing basis, with the goal of having 1.5 times the leverage of Bitcoin.
As part of this plan, MicroStrategy stated that half of the capital will come from stocks, while the other half will come from fixed income securities.
The company sold 13.6 million shares on the market through the market sale program in the week ending November 17. In early November, the company announced an additional $2 billion in net proceeds from share sales.
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