MicroStrategy plans $400M corporate bond sale to fund bitcoin buying spree

Company warns bitcoin holdings will result in impairment loss of at least $284.5M

MicroStrategy Inc. is selling debt to fund additional bitcoin purchases despite warning that soured investments in the cryptocurrency will result in another massive impairment loss. 

The Tysons Corner, Virginia-based business intelligence provider said on Monday that it will sell $400 million in senior secured notes, making for the first corporate bond sale where the proceeds will be used to buy bitcoin. 

Ticker Security Last Change Change %
MSTR MICROSTRATEGY INC. 1,684.84 +140.77 +9.12%

Bitcoin was trading at around $36,100 per coin, meaning without fees the company would be able to purchase around 1,108 bitcoins. 

"In an effort to keep the price of #Bitcoin and his company's balance sheet propped up, @michael_saylor announced #MicroStrategy will borrow another $400 million to buy more Bitcoin," tweeted Peter Schiff, chief economist and global strategist at Euro Pacific Capital. "The board of directors needs to stop a crazed Saylor from throwing good money after bad Bitcoin."

MicroStrategy CEO Michael Saylor has been at the forefront of the bitcoin movement.

He believes the cryptocurrency is the "most secure, most reliable, most certain thing in the entire economic universe."

Saylor has used his company’s cash to amass a war chest of 92,079 bitcoins at an average price of $24,450 per coin. Saylor has already held a convertible debt offering to boost its bitcoin holdings. The company has spent about $2.25 billion on its bitcoin holdings. 

News of the debt offering came alongside another filing that said MicroStrategy expects to incur an impairment loss of at least $284.5 million in the three months ending June 30, bringing its total impairments to more than $500 million. 

"This may be the most irresponsible action I've ever seen from an executive team or board," said Marc Lichtenfeld, chief income strategist for financial published The Oxford Club. "Does Microstrategy even have a business anymore or is it simply a proxy for Bitcoin - with borrowed money?" 

MicroStrategy shares were down 62% from their Feb. 9 peak through Friday while bitcoin was 44% below its April 12 high.