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MicroStrategy Closes $205 Million Bitcoin-Collateralized Loan with Silvergate Bank to Purchase Bitcoin

MicroStrategy's Revenue for the Third Quarter Fell Short of its Estimates

MacroStrategy, a subsidiary of MicroStrategy Incorporated, has received a $205 million term loan from Silvergate Bank, which is a subsidiary of Silvergate Capital Corporation.

To protect the interest-only loan, Silvergate and MicroStrategy have agreed to entrust a custodian of Bitcoin to MacroStrategy on a mutually agreed-upon basis. 

Terms of the Loan agreement

In the terms of the loan agreement, the money from the loan can be used to buy bitcoins, pay fees and interest, and cover expenses related to the loan transaction. It can also be used for MacroStrategy’s or MicroStrategy’s general business goals.

Shareholders of MacroStrategy were informed on Monday that the company’s wholly-owned subsidiary had agreed to take on a $204.7 million loan from crypto-focused loan company Silvergate Bank last Wednesday.

Approximately $820 million in bitcoin was pledged as collateral for the three-year loan, representing approximately 12 percent of MicroStrategy’s total cryptocurrency holdings.

There must be at least $410 million worth of bitcoin to back the loan if the entire $205 million principal balance is kept. It is the use of bitcoin by MicroStrategy, a software business, that has gained greater attention.

Interest-only loans are backed by a part of MacroStrategy’s collateral account, which is held by a custodian chosen by the parties.

About MicroStrategy, Inc.

On Nasdaq: MicroStrategy (MSTR), the biggest independent, publicly listed analytics and business intelligence firm. There are many countries where MicroStrategy is a trademark of MicroStrategy Incorporated, including the United States of America. 

Silvergate, Inc.

Silvergate Capital Corporation (NYSE: SI) is a leading supplier of innovative financial infrastructure services and solutions for the rapidly expanding digital currency sector.

With the Silvergate Exchange Network, the company’s real-time payments network, it serves a growing class of digital currency enterprises and investors across the globe with a variety of payment, lending, and financing options. In preparation for the future of digital currencies, Silvergate is helping to reshape global trade.

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