MicroStrategy Unit Gets $205M Collateral Loan From Silvergate to Buy Bitcoin

MacroStrategy, a subsidiary of MicroStrategy (MSTR), has received a $205 million term loan from crypto payments provider Silvergate Bank (SI).

• The loan was given through the Silvergate Exchange Network (SEN) Leverage program, which issues U.S. dollar loans using bitcoin as collateral. The loan was collateralized with about $820 million worth of bitcoin, according to a regulatory filing.
• Shares of MicroStrategy were flat during premarket trading.
• MicroStrategy, a software company, has become known more for its embrace of bitcoin. In the fourth quarter, the company took a nearly $150 million impairment charge on its bitcoin holdings because of the cryptocurrency's price drop.
• The interest-only loan is secured by a certain portion of bitcoin held in MacroStrategy’s collateral account, which has a custodian agreed upon by both parties.
• MacroStrategy can use the loan to purchase bitcoin or pay interest and fees related to the loan or for MacroStrategy’s or MicroStrategy’s general corporate needs.
• Launched in 2020, Silvergate’s SEN Leverage program had $570.5 million in commitments at the end of last year, according to the press release.
• “The SEN Leverage loan gives us an opportunity to further our position as the leading public company investor in bitcoin,” MicroStrategy CEO Michael Saylor said in the press 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.”