MicroStrategy chief Michael J. Saylor took to Twitter today to confirm that the company has taken out a loan to acquire more Bitcoin.
According to the release, Silvergate Bank issued a $205 million interest-only term loan to MacroStrategy LLC, a subsidiary of MicroStrategy. Which is basically a bitcoin-backed loan to acquire more bitcoin.
This means that the loan is secured by certain Bitcoins held in MacroStrategy’s collateral account with a custodian mutually authorized by Silvergate and MacroStrategy.
The collateral value is approximately $820 million worth of Bitcoin for the unsecured loan, according to the exchange notification.
It should be noted that MicroStrategy is already the largest public company to hold more than 0.5% of Bitcoin’s total supply at 125,051 tokens. Bitcoin represents 102% of MicroStrategy’s total market capitalization at the time of writing, according to Bitcoin Treasuries estimates.
With the new loan, MacroStrategy not only plans to buy more Bitcoins, but it will also use the funds to pay fees and interest related to the loan transactions and other corporate goals of the two entities.
Saylor said, “The SEN Leveraged Loan gives us the opportunity to strengthen our position as the leading public investor in bitcoin,”
Further, adding that the company will use the capital to turn Bitcoin into productive collateral for the business. Such an arrangement falls under the SEC’s Credit and Security Agreement. The securities regulator said on its website that the loan matures on March 23, 2025 and bears interest at a variable rate.
Alan Lane, Managing Director of Silvergate, said, “We are delighted to add MicroStrategy to our growing list of SEN Leverage borrowers. Their innovative approach to cash management is an outstanding example of how institutions can use their bitcoin to support and grow their business.
That said, Saylor has long been a strong supporter of Bitcoin.
However, his bitcoin hoarding is not without criticism. Crypto commentator Mr. Whale alleged last year that the company he ran was “emptying” the holdings into a “shady LLC”.
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