MicroStrategy Plans $2 Billion Stock Offering to Expand Bitcoin Reserves

MicroStrategy, the world’s largest corporate holder of Bitcoin, has unveiled plans to raise $2 billion through a perpetual preferred stock offering.

This initiative aims to expand the company’s Bitcoin reserves and strengthen its balance sheet, aligning with its ambitious growth strategy.

MicroStrategy Pushes New Limits With Bitcoin Funding Strategy

In a January 3 disclosure, MicroStrategy clarified that this offering is separate from its previous plans to secure $21 billion in equity and an equal amount in fixed-income instruments.

The perpetual preferred stock could be funded through various mechanisms, including the conversion of class A common stock, issuing cash dividends, or redeeming shares. The offering would provide investors with regular dividends without a maturity date, making it a unique tool for raising capital.

Dylan LeClair, Metaplanet’s director of Bitcoin strategy, emphasized the innovative nature of this move. He noted that the offering allows investors to gain exposure to Bitcoin’s inherent volatility while providing MicroStrategy with a cost-effective way to raise funds.

LeClair estimated that even if the annual dividend rate reaches 6%, the company would only pay $120 million annually on the $2 billion raise — a manageable figure for a firm that secured over $15 billion in equity capital in 2024.

“Volatility is THE product, and BTC Yield is the Key Performance Indicator. The indefinite optionality is THE most interesting product that MSTR can sell to the fixed income market,” LeClair stated.

Meanwhile, the company anticipates launching the offering in the first quarter of 2025, contingent on favorable market conditions and other factors. However, MicroStrategy has not committed to proceeding with the plan.

MicroStrategy Bitcoin Holdings. Source: Bitcoin Treasuries

MicroStrategy’s consistent Bitcoin purchases have significantly enhanced its market position. The company’s share value has soared and has secured a spot on the Nasdaq 100 index. Moreover, the firm’s innovative approach to funding — issuing debt and equity to finance Bitcoin purchases—has earned it recognition as a pioneering “Bitcoin treasury company.”

However, this strategy comes with challenges. Issuing new shares to raise capital dilutes the ownership of existing shareholders, which can reduce earnings per share. The Kobeissi Letter highlighted this challenge in a detailed analysis, warning that a failure to secure additional funding could jeopardize MicroStrategy’s Bitcoin acquisition strategy.