MacroStrategy LLC – subsidiary of trade analytics and business strategy company MicroStrategy which is well-known for their allocation to bitcoin – has recently closed on a $205 million bitcoin-collateralized loan purchased through the Silvergate Exchange Network (SEN) Leverage program operated by Silvergate Bank, per a press release from the two companies.
A collateral account with a mutually-authorized custodian will oversee the interest-only term loan. The loan is allotted a three-fold purpose: buy bitcoin, pay fees and interest related to the loan, or general purposes to be determined by either MicroStrategy, or MacroStrategy, according to the terms of the loan.
“The SEN Leverage loan gives us an opportunity to further our position as the leading public company investor in bitcoin,” says Michael Saylor, Chairman and Chief Executive Officer of MicroStrategy, per the release. “Using the capital from the loan, we’ve effectively turned our bitcoin into productive collateral, which allows us to further execute against our business strategy.”
MicroStrategy continuously shows the optionalities available for taking out debt to secure bitcoin for their balance sheet, as they currently hold 125,051 BTC, valued today at just under $6 billion USD. Being a collateralized loan, extreme movements downward in the price of bitcoin could result in MacroStrategy experiencing a margin call, but with the excessive reserves of MicroStrategy, the largest corporate holder of BTC, MacroStrategy has room for comfort.
“We’re thrilled to add MicroStrategy to our growing list of SEN Leverage borrowers,” stated Alan Lane, Chief Executive Officer of Silvergate. “Their innovative approach to treasury management is an exceptional example of how institutions can utilize their bitcoin to support and grow their business.”
SEN Leverage began in 2020 to provide institutional access to USD loans collateralized by bitcoin. By December 31st of 2021, the program had grown to over $570.5 million in commitments, showcasing a rallying cry for dollarized capital access for bitcoin accumulation.