Microstrategy Unveils $42 Billion Plan to Power Large-Scale Bitcoin Purchases

Aiming High: Microstrategy’s $42 Billion Vision for Unmatched Bitcoin Reserves

Software intelligence firm Microstrategy Inc. (Nasdaq: MSTR) announced its Q3 2024 results on Wednesday, detailing a $42 billion capital-raising initiative through equity and fixed-income offerings.

“Our focus remains to increase value generated to our shareholders by leveraging the digital transformation of capital,” President and CEO Phong Le explained. “Today, we are announcing a strategic goal of raising $42 billion of capital over the next 3 years, comprised of $21 billion of equity and $21 billion of fixed income securities, which we refer to as our ’21/21 Plan.’” Le added:

As a Bitcoin Treasury Company, we plan to use the additional capital to buy more bitcoin as a treasury reserve asset in a manner that will allow us to achieve higher BTC Yield.

Microstrategy’s Q3 2024 revenues from its software business totaled $116.1 million, a 10.3% year-over-year drop, with subscription services up 32.5% to $27.8 million. Gross profit reached $81.7 million at a 70.4% margin, down from 79.4% in Q3 2023. Operating expenses, primarily digital asset impairment losses, surged by 301.6% to $514.3 million, resulting in a $340.2 million net loss. Cash reserves were $46.3 million, down slightly from December 2023’s $46.8 million.

In Q3, Microstrategy expanded its bitcoin holdings by 11%, achieving a year-to-date BTC Yield of 17.8%, while reducing annualized interest expenses by $24 million, according to CFO Andrew Kang. The firm noted:

As of September 30, 2024, the carrying value of the company’s digital assets (comprised of approximately 252,220 bitcoins) was $6.851 billion.

The original cost basis and current market value were $9.904 billion and $16.007 billion, respectively, reflecting a bitcoin market price of $63,463. Despite a 10.3% revenue decrease and a $340.2 million net loss, the company aims to use the “21/21 Plan” to boost long-term returns.