MicroStrategys 21 Billion Stock Plan Surpasses Tesla 21 is the Magic Number in the Bitcoin Realm
Bitcoin development company MicroStrategy plans to sell a record-breaking $21 billion in new stocks to increase its Bitcoin inventory, surpassing Tesla’s $10 billion in 2020. MicroStrategy CEO Phong Le also explained the uniqueness and importance of 21 in the Bitcoin world.
MicroStrategy’s software business is still losing money, and they plan to raise an additional $42 billion in the next three years to further invest in Bitcoin.
MicroStrategy’s new stock offering exceeds Tesla
According to Bloomberg, MicroStrategy’s at-the-market offering this time far exceeds the amount raised by Elon Musk’s Tesla four years ago.
Note: At-the-market offering is a way of publicly issuing stocks that companies typically use to gradually raise funds. The company will gradually sell newly issued stocks or stocks already held by the company at the prevailing market price through designated brokers. These stocks will be sold on the secondary market, and the broker will give the cash proceeds to the issuing company, which can be used for various purposes such as general operating funds, research and development expenses, debt repayment, etc.
MicroStrategy has raised over $3.5 billion through various fundraising activities this year, making this stock plan particularly notable. The $21 billion is currently the largest of the four largest transactions globally.
Bloomberg data shows that Tesla raised $10 billion through two separate transactions in just over three months in 2020, while healthcare REIT Welltower Inc. raised over $11 billion through a multi-year plan. This method of selling stocks through the so-called “at-the-market offering” will hire a brokerage firm, apply to the U.S. Securities and Exchange Commission (SEC) for a total amount, and then raise funds in the market when needed.
For MicroStrategy, selling stocks and convertible bonds to buy Bitcoin is key to its business. According to its latest financial report, MicroStrategy has purchased Bitcoin through $4.3 billion in convertible bonds and $4.3 billion in new stocks, with a total Bitcoin holding of 252,220 as of October 29, at an average cost of $39,266 per Bitcoin.
Why $21 billion?
MicroStrategy announced the “21/21 Plan,” aiming to increase $42 billion in capital over the next three years, including $21 billion in equity and $21 billion in fixed-income securities, to further support its Bitcoin acquisition as part of its treasury reserve strategy.
MicroStrategy CEO Phong Le stated that part of the reason for this number is related to the science fiction novel “The Hitchhiker’s Guide to the Galaxy,” where a supercomputer calculated the answer to life, the universe, and everything as the number 42. He said in the earnings call:
We believe this is a unique number with some special features. It is the sum of 21 plus 21. We all know that 21 is a magical number in the Bitcoin world, with a maximum of only 21 million Bitcoins in circulation.
MicroStrategy’s recent move has also sparked market discussion, with Peter Schiff, known as the gold bull, mocking MicroStrategy with an “egg man” joke, stating that MicroStrategy is not making money and Bitcoin is just an old scam in new packaging.
