Microstrategy strengthens its bitcoins bet with new preferential action emissions

Microstrategy raises $ 563.4 million through preferential shares for $ 80 per share, 8% coupon and a liquidation value of $ 100.
The company continues to accumulate Bitcoins with a recent purchase of 10,107 BTC, which increases its assets to $ 471,107 worth $ 49.4 billion.
Microstrategy and Coinbase question 15% of the tax on unrealized profits, which could store billions of taxes on their BTC assets without transferring dollars.

Strategic fundraising for continuation of BTC accumulation

MicroStrategy Doubles Down on Bitcoin with New Issuance of Convertible Preferred Stock

MicroStrategy, the prominent business intelligence firm led by Michael Saylor, has made headlines once again with a bold move that underscores its unyielding commitment to Bitcoin. The company recently announced its plans to issue convertible preferred stock as part of a new financial strategy aimed at raising significant funds for its ongoing Bitcoin acquisition program. This move not only reinforces the company’s position as one of the most prominent institutional holders of Bitcoin but also reflects its forward-looking vision in terms of both capital allocation and managing the taxation challenges associated with digital assets.

The New Issuance of Convertible Preferred Stock

MicroStrategy has set the public price for its new issuance of convertible preferred stock at $80 per share, with plans to issue these financial instruments on February 5, 2025. The company expects to raise approximately $563.4 million through this fundraising initiative. This issuance comes with an 8% coupon, meaning it will generate a fixed annual return for investors who hold the preferred stock. Additionally, the liquidation value of the stock will be set at $100 per share, which could represent an upside for investors should the company perform well over time.

The primary purpose of this issuance is to fund MicroStrategy’s ongoing Bitcoin acquisition strategy, which has been a cornerstone of the company’s operations under Saylor’s leadership. The funds raised through this offering will allow MicroStrategy to continue its Bitcoin buying spree, ensuring that its portfolio of digital assets continues to grow.

MicroStrategy’s “21/21” Strategy

MicroStrategy’s Bitcoin acquisition program is part of a larger strategic vision known as the “21/21” plan. This bold initiative is designed to raise $21 billion in capital and $21 billion in fixed-income securities to finance the company’s accumulation of Bitcoin. The idea is simple: to strengthen the company’s balance sheet and long-term financial stability by accumulating a large amount of Bitcoin, which it sees as a store of value and an asset that will appreciate over time.

Since the adoption of this strategy, MicroStrategy has become one of the most prominent institutional investors in Bitcoin, with a staggering amount of over 470,000 BTC (Bitcoin) now held on its balance sheet. The total value of this Bitcoin portfolio is estimated at around $49.4 billion, with potential unrealized gains exceeding $19 billion.

By raising additional funds through preferred stock issuance and fixed-income securities, MicroStrategy plans to continue its aggressive Bitcoin acquisition strategy. The company’s commitment to Bitcoin remains resolute, even as the cryptocurrency market continues to experience volatility. This shows a clear long-term belief in the value of Bitcoin and its role in shaping the future of financial markets.

The Latest Bitcoin Acquisition

In late January 2025, MicroStrategy made another major acquisition, purchasing 10,107 BTC for approximately $1.1 billion. This new purchase was part of its ongoing strategy to bolster its Bitcoin holdings, adding more digital assets to its growing portfolio. This acquisition brought the total number of Bitcoin held by MicroStrategy to 471,107 BTC, reinforcing its position as the largest corporate holder of Bitcoin globally.

The move also highlights the company’s aggressive stance on accumulating Bitcoin, even at a time when the market is experiencing fluctuating prices. Despite Bitcoin’s volatility, MicroStrategy has stuck to its long-term strategy of accumulating the cryptocurrency, believing that it will outperform traditional fiat currencies in the future.

The Debt Purchase Program and Bond Issuance

MicroStrategy has also been active in the bond markets. On January 24, 2025, the company launched a debt purchase program for its 2027 bond issuance. This bond issuance was valued at $1.05 billion, with the company issuing a notice of payment to bondholders. The holders of these bonds are given until February 24, 2025, to buy them back at their nominal value or to convert them into MicroStrategy shares.

This strategy allows MicroStrategy to raise additional capital while maintaining flexibility in terms of its financial instruments. By issuing bonds and offering bondholders the option to convert their holdings into stock, MicroStrategy is giving investors a chance to participate in the company’s growth while also ensuring that it has the resources to continue its aggressive Bitcoin acquisition strategy.

Taxation and the Minimum Tax Alternative Income Tax (CAMT)

MicroStrategy is not just focused on accumulating Bitcoin. The company is also deeply involved in advocacy efforts related to the taxation of digital assets. On January 2, 2025, MicroStrategy, along with Coinbase, sent a letter to the U.S. Internal Revenue Service (IRS) regarding the Minimum Tax Alternative Income Tax (CAMT). This tax applies to companies whose regulated financial income exceeds $1 billion over a three-year period, imposing a 15% tax on those earnings.

MicroStrategy has expressed concern that this tax could unfairly penalize companies that hold significant amounts of digital assets, such as Bitcoin, without selling them. Under the current structure of the CAMT, companies would be required to pay taxes on unrealized gains—meaning that if the price of Bitcoin appreciates but the company does not sell its holdings, it could still be liable for taxes based on those unrealized gains. This could result in MicroStrategy facing a substantial tax liability on its Bitcoin holdings, despite not having converted the assets into dollars.

MicroStrategy has joined forces with Coinbase in advocating for changes to this tax rule, arguing that it would unfairly burden companies like theirs that are holding Bitcoin for the long term. The potential for massive tax liabilities could hurt companies’ financial flexibility and could lead to billions of dollars in tax payments despite no actual cash flow from the sale of the assets.

MicroStrategy’s Continued Bitcoin Commitment

MicroStrategy’s unwavering commitment to Bitcoin, coupled with its innovative strategies to raise capital, such as issuing convertible preferred stock and bonds, highlights the company’s forward-thinking approach in the cryptocurrency space. The company’s decision to continue acquiring Bitcoin at a rapid pace demonstrates its belief in the long-term potential of the cryptocurrency, even in the face of regulatory challenges and market fluctuations.

As the largest corporate holder of Bitcoin, MicroStrategy’s actions continue to send a strong signal to the market about the future of digital assets. By raising funds through strategic debt offerings and stock issuances, the company is positioning itself to weather any future volatility in the crypto market while continuing to accumulate Bitcoin and further cement its place as a leader in the institutional adoption of cryptocurrencies.

In conclusion, MicroStrategy’s recent initiatives—ranging from issuing convertible preferred stock to advocating for tax reform—underline its commitment to Bitcoin and its broader vision for the future of digital assets. Whether through direct acquisition or by raising funds through innovative financial instruments, MicroStrategy is doubling down on its belief in Bitcoin as a store of value and a critical asset in the future of finance.