"The term loan, which is interest-only, is secured by certain Bitcoin held in Macrostrategy’s collateral account.
A $205M Bitcoin-Backed Loan will be used by a company to purchase Bitcoin
Microstrategy, a Nasdaq-listed probitcoin software company, announced Tuesday that one its subsidiaries had received a bitcoin-backed loan to buy additional Bitcoin.
Microstrategy CEO Michael Saylor tweeted Tuesday
Macrostrategy, a subsidiary of Microstrategy, has closed a $205 million bitcoin-collateralized loan with Silvergate Bank to purchase bitcoin.
Silvergate Bank has "issued a term loan of $205 million under its Silvergate Exchange Network(SEN) Leverage Program to Macrostrategy LLC," Microstrategy reported.
The company stated that the interest-only term loan was secured by bitcoin in Macrostrategy’s collateral account with a custodian authorized by both Silvergate and Macrostrategy.
The agreement states that Macrostrategy can use loan proceeds to buy bitcoins, pay interest and fees related to the loan transaction or for general corporate purposes of its parent company.
SEN Leverage was launched in 2020 and provides institutional-grade capital access through U.S. Dollar loans that are collateralized with bitcoin.
Saylor said, "The SEN Leverage Loan gives us the opportunity to further our status as the largest public company investor bitcoin."
We have effectively made our bitcoin productive collateral by using the capital we borrowed to finance our business strategy.
Microstrategy already purchased 125.051 BTC to fund its treasury. The company's chief financial officers explained that the company has used bitcoin to "buy and hold" as a strategy.