Reduced debt and increased BTC…Saylor's 'Bitcoin Empire' grows

▲ Michael Saylor, Strategy (MSTR)/ChatGPT generated image ©

Over 1 trillion won in debt was reduced without selling a single Bitcoin (BTC). As Strategy moved to strengthen its 'Bitcoin financial strategy' by repurchasing a large volume of convertible bonds at a discount, market attention is once again focused.

According to investment media FXStreet on May 26 (local time), Strategy repurchased $1.5 billion worth of 0% convertible bonds due in 2029 for approximately $1.38 billion in cash. This was a discount of about 8% compared to the face value. Through this transaction, Strategy explained that it achieved a Bitcoin profit of approximately 4,391 BTC and a BTC dollar profit effect worth $333 million.

With this measure, Strategy's outstanding convertible bond balance decreased from the original $8.2 billion to $6.7 billion. The company proceeded with the repurchase using existing cash holdings and funds from its Class A common stock (MSTR) and preferred stock (STRC) ATM (at-the-market) programs. Simultaneously, Strategy raised approximately $2 billion through the issuance of floating-rate perpetual preferred stock, among other means, and used a portion of these funds to purchase an additional 24,869 BTC.

Nevertheless, the company's total Bitcoin holdings remained at 843,738 BTC. Strategy reported a BTC return of 13.3% this year, with cumulative BTC profit since the beginning of the year reaching 89,378 BTC, and BTC dollar-denominated profit amounting to $6.8 billion. The company currently also holds approximately $871 million in cash equivalents and a preferred stock balance of $15.5 billion.

Michael Saylor, co-founder of Strategy, explained, "It's a strategy to optimize the balance sheet by simultaneously utilizing cash, equity, and credit products while expanding Bitcoin exposure per share." Phong Le, President, also assessed that the discounted debt repurchase is a measure to increase capital efficiency, and Andrew Kang, Chief Financial Officer (CFO), emphasized that it is "a positive transaction for both shareholders and bond investors."

Meanwhile, Strive, another Digital Asset Treasury (DAT, a cryptocurrency financial strategy company), also purchased an additional 1,109 BTC, increasing its total holdings to 16,500 BTC. According to filings with the U.S. Securities and Exchange Commission (SEC), Strive's Bitcoin holdings are valued at approximately $1.2 billion. Bitcoin was trading around $76,477 at the time of writing, down 1.4% on the day.

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