MacroStrategy signs a Bitcoin-collateralized loan with Silvergate for $205M as MSTR hits $520

YEREVAN (CoinChapter.com) – MacroStrategy, a subsidiary of business-intelligence firm MicroStrategy, closed a $205 million Bitcoin-collateralized loan from Silvergate, the “first blockchain bank.” The loan was purchased through the Silvergate Exchange Network (SEN) Leverage program operated by the bank.

MicroStrategy dives into Bitcoin again

The press-release detailed that SEN Leverage has grown to approximately $570.5 million in commitments, “demonstrating the increased need for access to capital in the digital currency industry.” Alan Lane, Chief Executive Officer of Silvergate, called the loan an “exceptional example” of Bitcoin utilization.

We’re thrilled to add MicroStrategy to our growing list of SEN Leverage borrowers. Their innovative approach to treasury management is an exceptional example of how institutions can utilize their bitcoin to support and grow their business.

mentioned the press-release.

MicroStrategy CEO Michael Saylor further commented on the matter, explaining the company’s position.

The SEN Leverage loan gives us an opportunity to further our position as the leading public company investor in Bitcoin. Using the capital from the loan, we’ve effectively turned our bitcoin into productive collateral. This allows us to further execute against our business strategy.

Asserted the CEO.

Also read: Is Marathon Digital, a Bitcoin mining stock, a better buy than MicroStrategy? Let’s see.

In detail, Saylor is an outspoken crypto proponent and has a history of purchasing Bitcoin while it’s bottoming out. The business intelligence firm has been investing in the flagship cryptocurrency since Aug. 2020.

As of Feb. 2022, its BTC treasury held north of 125,000 coins, acquired for approximately $3.8 billion. Furthermore, the CEO commented last month that he planned on obtaining more Bitcoin, despite the market decline and a call by U.S. securities regulators to revise its disclosure in future filings.

Meanwhile, the company’s stock MSTR continued to rally in unison with Bitcoin and jumped 2% in the previous 24 hours.

Also read: MicroStrategy comes back for more Bitcoin—MSTR drops 5.40%.

MSTR at $520

MSTR traded at $520 a share, a 10-week high for the tech stock. Notably, MSTR erased most of its year-to-date losses, maintaining the upside impulse for the previous two weeks.

However, despite the BTC price favoring the company’s stock in Q1, MicroStrategy reported a net loss of $90 million or $8.43 a share in Q4 2021r, missing consensus estimates for a profit of 89 cents a share.

Also read: Coinbase stock down 15% in four days — CEO in trouble with Canadian regulator?.

In detail, since implementing the heavy Bitcoin purchase strategy, MSTR became susceptible to the digital asset’s price volatility, as the chart below illustrates.

As CoinChapter covered in the previous MSTR review, Nasdaq estimated MicroStrategy’s 2022 prospects as grim. Experts cited minor improvement expectations for the year ahead, fueled by fears of bankruptcy in case of another Bitcoin price collapse.

Also read: Bitcoin hits $47.5K, but its correlation with U.S. equities spells extreme selloff risks.

Moreover, the company previously reported $83.5 million in cash on hand. Thus, it could afford to “eat the losses,” considering that half of its market cap comprises the Bitcoin holdings. But as of Mar. 30, the Bitcoin price headed north, taking the dependent MSTR along for the ride.