People in the crypto industry know MicroStrategy very well for its periodic Bitcoin purchases. Recently, MicroStrategy has taken a Bitcoin-backed Loan for purchasing more Bitcoin in the future.
The Nasdaq listed software company announced yesterday that one of its subsidiaries has taken a bitcoin-backed loan. Moreover, the company’s CEO Michael Saylor tweeted about this news, saying:
“Macrostrategy, a subsidiary of Microstrategy, has closed a $205 million bitcoin-collateralized loan with Silvergate Bank to purchase bitcoin.“
Microstrategy in its announcement stated that Silvergate Bank has issued the amount via its Exchange Network Leverage (SEN) Program. Also, the company noted:
“The interest-only term loan is secured by certain bitcoin held in Macrostrategy’s collateral account with a custodian mutually authorized by Silvergate and Macrostrategy.”
According to the terms of the agreement, Macrostrategy will use the loan to purchase bitcoins, pay fees, interest, and expenses related to the loan transaction.
Moreover, SEN Leverage Loan provides institutional-grade access to capital through U.S. Dollar loans. Moreover, the Bank uses Bitcoin as collateral for these loans. Also, the bank had launched the program in 2020.
The CEO of MicroStrategy commented about the opportunity the SEN program provides:
“Using the capital from the loan, we’ve effectively turned our bitcoin into productive collateral, which allows us to further execute against our business strategy.“
As of now, MicroStrategy has acquired 125,051 Bitcoin for its treasury. The company had regularly purchased Bitcoin without making much fuss in the crypto markets.
The company’s chief financial officer explained their strategy for purchasing Bitcoin:
“Our strategy with bitcoin has been to buy and hold, so to the extent, we have excess cash flows or we find other ways to raise money, we continue to put it into bitcoin.”