MicroStrategys Software Business Continues to Report Losses Plans to Raise 42 Billion to Further Invest in Bitcoin Over the Next Three Years
Bitcoin development company MicroStrategy has released its third-quarter financial report, continuing to increase its Bitcoin purchases. The company’s total Bitcoin holdings amount to 252,220, with an average cost of $39,266 per Bitcoin, resulting in an unrealized profit of up to $8.3 billion. MicroStrategy stated that it plans to raise an additional $42 billion in capital over the next three years to further support its Bitcoin acquisitions.
MicroStrategy Plans to Raise $42 Billion Over the Next Three Years
MicroStrategy announced its “21/21 Plan,” aiming to raise $42 billion in capital over the next three years, which includes $21 billion in equity and $21 billion in fixed-income securities. This plan will further support its Bitcoin acquisitions as part of its treasury reserve strategy.
Year to date, its “Bitcoin yield” stands at 17.8%, with the target for the next three years adjusted from an annual range of 4%-8% to 6%-10%.
Strengthening MicroStrategy’s Capital Structure
MicroStrategy is strengthening its capital structure through the following actions:
Issuing $1.01 billion in convertible senior notes maturing in 2028, along with the issuance of $1.1 billion in Class A common stock
Redeeming $500 million in senior secured notes maturing in 2028 (with an interest rate of up to 6.125%) and releasing all collateral securing these notes (Bitcoin)
Annual fixed interest expenses have significantly decreased from $59 million to approximately $34.6 million. All adjusted debt is convertible debt, with an average interest rate of only 0.811%.
(MicroStrategy refinanced by issuing new debt to buy back 7,420 Bitcoins)
Software Business Losses, No Fair Value Recognition for Bitcoin
MicroStrategy’s software business continues to operate at a loss, with revenue declining by 10.3% year-on-year to $116.1 million. The operating loss reached $18.5 million.
In this report, MicroStrategy recognized a digital asset impairment of up to $412.1 million and did not use fair value to recognize the value of Bitcoin. Therefore, although Bitcoin has surged to $72K, resulting in an unrealized profit of up to $8.3 billion, this is not reflected in MicroStrategy’s financial statements.
MSTR Surges 257% This Year
MicroStrategy’s stock price has soared 257% this year, outperforming Bitcoin’s 70% increase. Following a 10-for-1 stock split in early August, the share price quickly rose to $247.
