U.Today - MicroStrategy (MSTR), the business intelligence firm with a huge bet on Bitcoin, is set to redeem its 2027 Convertible Notes. In an update shared by Michael Saylor, the executive chairman, the aggregate principal amount of the notes to redeem totals about $1.05 billion.
MicroStrategy’s move to redeem funded Bitcoin accumulation
MicroStrategy issued these notes to raise funds for its aggressive Bitcoin accumulation. As of Jan. 21, 2025, the cumulative Bitcoin holdings of MicroStrategy stand at a staggering 461,000 BTC. This sum is valued at approximately $48.86 billion at the current market price.MicroStrategy’s announcement means the firm has decided to redeem the notes or settle the $1.05 billion debt before it matures.
However, this settlement will come in the form of conversion requests from notes to MSTR shares. Generally, convertible notes are a debt instrument that allows bondholders to convert their holdings to the issuing company's shares. This is at a predetermined price.
According to the bondholders' notice, all outstanding notes must be redeemed by Feb. 24, 2025. The redemption price equals 100% of the principal amount, in addition to accrued and unpaid special interest.
MicroStrategy says the notes are convertible at the applicable conversion rate of $142.38 per share.
Strategic implications and market reactions
This development has triggered a reaction from the broader cryptocurrency market regarding its likely impact on MSTR and BTC.Primarily, analysts say the decision to settle bondholders in shares and not cash is strategic. It helps MicroStrategy avoid using much-needed funds that can become useful in additional Bitcoin purchases.
However, some have expressed concerns that this could dilute MSTR shares. The current value of MSTR stocks could decline, affecting existing shareholders’ stock.
Over the years, MicroStrategy has leaned heavily on Bitcoin for much of its corporate strategy and profited massively from it. This development might indicate that the firm is doubling down on its holdings. Hence, investors in MSTR will have to monitor how much impact the move will have on the stock price.