At a time when no further Bitcoin purchases have been announced by MicroStrategy, the world’s largest publicly traded BTC holder (owning more than 125,000 BTC), news have surfaced that MicroStrategy’s subsidiary, MacroStrategy has borrowed millions of dollars from Silvergate Bank to buy Bitcoin.
In a press release on Tuesday, MicroStrategy said that MacroStrategy has obtained a $205 million loan from SilverGate Bank, which is secured by certain amount of bitcoins in MicroStrategy’s account. The funds are to be used to purchase bitcoins, pay fees and interest associated with the loan, and address general corporate expenses.
The SEN Leverage loan gives MacroStrategy the opportunity to secure their position as a leading Bitcoin investor in publicly traded companies. Using the capital from the loan, they have effectively converted bitcoins into productive collateral, allowing them to continue to execute their business strategy.
The Silvergate Exchange Network service, which launched in 2020, allows companies to obtain loans that are secured by bitcoins. As of December 31, 2021, $570 million worth of loans are covered in this way. For example, a major Bitcoin miner, Marathon Digital, has recently used the bank’s services, obtaining a $100 million loan to finance additional mining infrastructure.
As for MicroStrategy, the firm began investing in Bitcoin in August 2020 with a $250 million purchase. It now owns 125,051 BTC, which translates to nearly $6 billion.