Data analytics firm MicroStrategy is looking to deepen its investment in digital currencies. On Tuesday, the company announced that a subsidiary, MicroStrategy, has taken on a $205 million loan to buy more Bitcoin (BTC). The crypto will be used as collateral as MicroStrategy is banking on an eventual BTC price increase to $50K.
The day before, MicroStrategy revealed an agreement with crypto-inclined lender Silvergate Bank via regulatory filing to take on the lofty loan. Earmarked at $204.7 million net of closing fees and expenses, this loan will not just facilitate Bitcoin purchases. It will also reportedly go towards paying loan expenses and other general corporate expenses.
MicroStrategy’s three-year loan had nearly $820 in collateral backing from MicroStrategy’s own BTC cache. This represents approximately 12% of the American company’s overall holdings in digital currencies. The collateral sum meets the minimum requirement of $410 for the full principal of $205 million.
In a statement, MicroStrategy explained that the loan allows it to leverage its position as the largest Bitcoin public holder. The data analytics platform, and its billionaire founder Michael Saylor, have long been devotees of the leading crypto. Back in December 2021, Saylor revealed that he owned 17K in BTC worth $235 million at the time.
Bitcoin has recently been increasing, trading at levels not seen since the first week in January – at $47,320.91.
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