Published: 29.03.2022
Article reading time:
2 minutes.
A subsidiary of MicroStrategy received a $205 million emergency loan from Silvergate Bank, providing cryptocurrency as collateral.
Credit for MacroStrategy was provided through the Silvergate Exchange Network (SEN) leverage program. According to regulatory documents, the loan was secured by bitcoins in the amount of about $820 million. At the same time, the value of MacroStrategy shares did not change.
The interest-bearing loan is secured by a portion of the bitcoins held in the MacroStrategy collateral account. The account has a custodian agreed by both parties. MacroStrategy may use the loan to purchase bitcoins, pay interest and fees associated with the loan, or for general corporate needs of MacroStrategy or MicroStrategy.
The Silvergate SEN Leverage program had $570.5 million in liabilities at the end of last year. MicroStrategy CEO Michael Saylor says this is one of the ways bitcoin is used on the company’s balance sheet:
“The SEN Leverage loan gives us an opportunity to strengthen our position as a leading public company investor in Bitcoin. Using the capital of the loan, we have effectively turned our bitcoins into a productive collateral that allows us to execute our business strategy.”
Recall that the software company MicroStrategy has become popular thanks to its investment in bitcoins. In the fourth quarter of 2021, the company suffered a loss of $150 million due to falling prices for cryptocurrency.
In February, MicroStrategy CFO Fong Le said that the company will stick to its previous strategy: invest excess cash reserves in the main cryptocurrency. Le echoed the recent words of the company’s CEO, who claimed that regardless of market conditions, the company would not sell its holdings of bitcoins almost verbatim.
Source: Bits
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