MacroStrategy a subsidiary of MicroStrategy has announced that it will purchase Bitcoin following a multimillion-dollar BTC-collateralized loan from Silvergate Bank. The loan will also be used to handle general corporate expenses and pay interest related to the loan.
Silvergate offered a $205 million loan “secured by certain Bitcoin stored in MacroStrategy’s collateral account,” according to MicroStrategy’s announcement on Tuesday. The loan funds will be used by the firm’s subsidiary MacroStrategy to buy Bitcoin (BTC), pay fees and interest on the loan, and cover normal business expenses.
MicroStrategy CEO Michael Saylor remarked, “The SEN Leverage loan gives us an opportunity to expand our position as the premier public business investor in Bitcoin.” “We’ve effectively turned our Bitcoin into productive collateral using the funds from the loan, allowing us to better execute against our business goal.”
The Silvergate Exchange Network leverage service, which was launched in 2020, allows businesses to secure BTC-collateralized loans in US dollars. As of December 31, the bank had approximately $570 million in obligations, according to the bank.
MicroStrategy’s Bitcoin holdings
MicroStrategy currently owns billions in bitcoin after completing a $250 million BTC investment in August 2020. The company bought bitcoin with cash on hand and profits from the sale of convertible senior notes in private offerings to institutional buyers. The firm’s 125,051 coins are worth about $6 billion, based on the current BTC price of $47,806 at the time of publication.
Many companies in the crypto and blockchain industries have benefited from Silvergate’s money. Marathon Digital, a crypto mining startup, received a $100 million credit line from the bank in October, which would be used to fund its operations as well as boost the number of BTC miners.
In November, Crypto.com announced cooperation with Silvergate that would allow institutional clients to deposit and withdraw funds using US dollars.