MicroStrategy subsidiary will purchase Bitcoin after closing $205M crypto-collateralized loan

MacroStrategy is a subsidiary to business intelligence firm MicroStrategy and said that it will buy Bitcoin after receiving a multimillion-dollar loan from Silvergate Bank.

MicroStrategy announced Tuesday that Silvergate had issued a $205,000,000 loan, “secured” by Bitcoin held in MacroStrategy’s collateral account. The proceeds will be used to buy Bitcoin (BTC), pay interest and general corporate expenses.

MicroStrategy CEO Michael Saylor stated that the SEN Leverage loan allows MicroStrategy to strengthen its position as the largest public investor in Bitcoin. “Using the capital provided by the loan, we have effectively made our Bitcoin productive collateral. This allows us to execute on our business strategy.”

MacroStrategy, a subsidiary of @MicroStrategy, has closed a $205 million bitcoin-collateralized loan with Silvergate Bank to purchase #bitcoin. $MSTR $SIhttps://t.co/QYw2ZgeE3U
Michael Saylor (@saylor), March 29, 2022

Silvergate Exchange Network leverage service, which was launched in 2020, allows companies to obtain BTC-collateralized loans in U.S. dollars. It had approximately $570 million in commitments at December 31 according to the bank.

MicroStrategy has now invested $250 million in BTC since August 2020. This was in addition to separate purchases using cash and the proceeds from convertible senior notes sales to institutional buyers. The firm’s 125k51 coins, which are valued at $6 billion, have a BTC price of $47,806 as of the publication date.

Related: MicroStrategy CEO will not sell $5B BTC stash despite crypto-winter

Many companies in the blockchain and crypto industry have benefited from Silvergate’s capital. The bank provided a $100 million credit line to Marathon Digital, a crypto mining company. This credit was used to finance its operations and expand the network of BTC miners. Silvergate and Crypto.com have partnered to allow institutional clients to withdraw or deposit from the crypto exchange in U.S. dollars.