MicroStrategy plans to raise $42 billion in capital over the next 3 years to buy more Bitcoin

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MicroStrategy, the world’s largest corporate Bitcoin holder, has unveiled plans to raise $42 billion in capital over the next three years to expand its Bitcoin holdings.

The announcement came during the company’s Q3 2024 financial results presentation. MicroStrategy’s newly announced “21/21 Plan” involves raising $21 billion in equity and an additional $21 billion through fixed-income securities.

MicroStrategy will use the capital to buy more Bitcoin

CEO Phong Le emphasized that this strategic initiative aims to increase shareholder value through digital capital transformation.

“Our focus remains to increase the value generated to our shareholders by leveraging the digital transformation of capital,” stated Le during the announcement. He further explained that the raised capital would be used to acquire more Bitcoin as a Treasury reserve asset.

The third quarter proved fruitful for MicroStrategy. The company had successfully raised $2.1 billion through equity and debt offerings.

CFO Andrew Kang reported that the company increased its Bitcoin holdings by 11% during the quarter while achieving a year-to-date BTC yield of 17.8%.

The company also managed to reduce its total annualized interest expense by $24 million. On August 7, 2024, MicroStrategy completed a 10-for-1 stock split of both its class A and class B common stock.

MicroStrategy’s core business shows mixed results

Despite the focus on Bitcoin acquisition, MicroStrategy’s core software business showed mixed results.

Total revenues decreased by 10.3% year-over-year to $116.1 million, while subscription services revenues increased by 32.5% to reach $27.8 million.

The company’s gross profit stood at $81.7 million with a 70.4% margin, compared to the previous year’s 79.4% margin. Product support revenues experienced an 8.7% decrease, settling at $61.0 million.

As the world’s first Bitcoin Treasury Company, MicroStrategy continues to pioneer institutional Bitcoin adoption. The company’s approach involves strategic Bitcoin accumulation using proceeds from equity and debt financings, alongside operational cash flows.

Through this aggressive capital raising initiative, MicroStrategy has purchased 252,220 Bitcoin over the years. According to the data from Saylortracker, the value of their current Bitcoin holdings stands at $18.27 billion.

Interestingly, the company is sitting on an unrealized gain of $8.3 billion. This is an 83.5% unrealized gain on their investment. Their last Bitcoin purchase was made on September 20, 2024. During this time, the company bought 7420 BTC for $458.2 million. The announcement by MicroStrategy comes amidst Bitcoin’s recent price surge above the $72,000 level.

CoinMarketCap data shows that Bitcoin is now hovering at $72,300, with a 7% surge over the last seven days.

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