MicroStrategy subsidiary MacroStrategy will invest in Bitcoin using funds provided by Silvergate Bank in a loan secured in the cryptocurrency.
American business intelligence company MicroStrategy has used part of its Bitcoin holdings (BTC) to support a $205 million loan provided by Silvergate Bank to its subsidiary MacroStrategy LLC, which will use the loan proceeds to fund its Bitcoin acquisition.
MicroStrategy CEO Michael Saylor shared on Twitter his company's strategy to continue increasing its BTC holdings.
MicroStrategy is currently the largest institutional investor in Bitcoin, holding a total of 125.051 BTC on its balance sheet. At the time of writing, BTC is trading on the market at a value of $47.250 per unit, so the company's holdings in this cryptocurrency amount to approximately 5.908 billion dollars.
In the press release, the company explained that it is a term loan, maturing in March 2025, secured by a certain amount of Bitcoin held in MacroStrategy's escrow account. In total, the bitcoins backing the loan are valued at $820 million, according to the form. Presentado by the company to the United States Securities and Exchange Commission (SEC).
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Financing the acquisition of additional bitcoins
Silvergate CEO Alan Lane has expressed admiration for the way MicroStrategy is using its Bitcoin reserves to further grow its investment in the cryptocurrency.
Lane said that the “Innovative approach to treasury management is an exceptional example of how institutions can use their bitcoin to support and grow their business.” The US bank's CEO also said he was delighted to add MicroStrategy to its growing list of clients and borrowers of the SEN Leverage program, which provides institutional-grade access to capital through Bitcoin-secured dollar loans.
Silvergate Bank is an American bank, member of the Federal Reserve, that offers solutions and services for companies and innovators interested in the cryptocurrency and digital asset industry.
MicroStrategy, the largest institutional investor in Bitcoin
On the other hand, Saylor indicated that the leverage strategy offered by the bank through its SEN Leverage program gives the company the opportunity to improve its position as “the leading public company investing in bitcoin”.
Saylor is keen to make clear the potential that exists in the world's leading cryptocurrency, capitalized at over $900.000 billion at the time of writing. «Using the loan capital, we effectively convert our bitcoin into productive collateral, allowing us to further execute our business strategy», Saylor said in the statement.
Under the terms of the agreement, MacroStrategy will use the loan proceeds to purchase bitcoins, as well as pay fees, interest and expenses related to the loan transaction or for general corporate purposes of both companies.
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