MicroStrategy Secures Bitcoin-collateralized Loan from Silvergate Bank to Buy $250M Worth BTC

UTC by Bhushan Akolkar · 2 min read
MicroStrategy Secures Bitcoin-collateralized Loan from Silvergate Bank to Buy $250M Worth BTC
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MicroStrategy said that it will use these funds towards making additional BTC purchases to its already existing pile of 125,000 Bitcoins.

Business intelligence firm MicroStrategy which already holds more than 125,000 Bitcoins (BTC) on its balance sheet, has secured another fresh loan to make additional purchases. On Tuesday, March 29, MicroStrategy announced that it has secured a $205-million loan from Silvergate Bank through the bank’s SEN leverage program.

Silvergate Bank launched its SEN Leverage Program back in 2020. It provides secure and institutional-grade loans in the U.S. Dollar against Bitcoin collateral. Silvergate says that there’s a growing demand for this product in the crypto space. As of the last year of 2021, SEN Leverage had grown to approximately $570.5 million in commitments.

The loan has been offered to MicroStrategy’s subsidiary – MacroStrategy. Silvergate Bank will offer this loan against the bitcoin held in MacroStrategy’s collateral account. For this, Silvergate and MacroStrategy have “mutually authorized” the custodian.

As said, MacroStrategy will use these funds to buy more Bitcoins. This is also the largest loan secured by any Bitcoin holding company. Additionally, MacroStrategy will also pay fees, interests, and expenses related to the loan transaction. Speaking of this development, Alan Lane, Chief Executive Officer of Silvergate said:

“We are thrilled to add MicroStrategy to our growing list of SEN Leverage borrowers. Their innovative approach to treasury management is an exceptional example of how institutions can utilize their bitcoin to support and grow their business.”

MicroStrategy and Its Bitcoin (BTC) Purchases

Business Intelligence firm MicroStrategy made its first Bitcoin purchase back in August 2020. Since then it has been continuously buying Bitcoin in phases. As said earlier, MicroStrategy holds more than 125,00 BTC worth a staggering $6 billion.

Its last Bitcoin purchase came in February 2022, for $25 million. Last month, the company CEO said that they have been finding ways to invest in Bitcoin. Speaking of the recent development, Michael Saylor, Chairman and Chief Executive Officer of MicroStrategy said:

“The SEN Leverage loan gives us an opportunity to further our position as the leading public company investor in bitcoin. 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.”

The MicroStrategy (NASDAQ: MSTR) stock has also witnessed steady growth over the last year and so. As of Tuesday, the MSTR stock recorded a 2% price surge. However, it is still trading at negative returns year-to-date.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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