MicroStrategy Repays $205M Silvergate Loan and Buys 6,500 More BTC

Updated: 28 March 2023

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Business intelligence firm MicroStrategy and the largest corporate Bitcoin holder has paid off its $205 million loan from failed, crypto-focused Silvergate Bank. The firm also added more BTC worth $150 million to its Bitcoin reserve.

The software company cited U.S. Securities and Exchange Commission (SEC) form 8-K filing on Monday that the loan from the defunct crypto-friendly bank was retired nearly two years early, releasing about 34,619 coins that were kept as collateral. MicroStrategy stated that it sold shares this year to raise $339.4 million and used the profits from the sale of its shares to pay off the remaining balance of the loan from Silvergate Bank.

MicroStrategy co-founder and an ardent Bitcoin advocate Michael Saylor revealed these developments in a Monday, March 27 tweet saying the company “repaid its $205M Silvergate loan at a 22% discount.”

The former Chief Executive Officer (CEO) of MicroStrategy said that the firm had added to its Bitcoin holdings, buying 6,455 more BTC at approximately $150 million at an average rate of $23,238 per Bitcoin. The latest stash brings the number of BTC held by the software provider to 138,955 coins acquired for approximately $14.14 billion at an average rate of $29,817 per Bitcoin.

According to the filing, MicroStrategy acquired its latest batch of Bitcoin between February 16, 2023, and March 23, 2023.

MicroStrategy repaid its $205M Silvergate loan at a 22% discount. As of 3/23/23, $MSTR acquired an additional ~6,455 bitcoins for ~$150M at an average of ~$23,238 per #bitcoin & held ~138,955 BTC acquired for ~$4.14B at an average of ~$29,817 per bitcoin. https://t.co/ALp9VLkTpt

— Michael Saylor⚡️ (@saylor) March 27, 2023

MicroStrategy –Silvergate Bank Loan Terms

In March 2022, MacroStrategy, a subsidiary of MicroStrategy, received a $205 million loan from the now defunct Silvergate bank under the Silvergate Exchange Network Leverage program. The loan was collateralized by a number of BTC owned by MicroStrategy and was scheduled to mature on March 23, 2025.

According to the terms of credit, the software provider was required to maintain a loan-to-collateral value ratio of less than 50%. MacroStrategy and Silvergate entered into a prepayment, waiver and payoff to credit and security agreement on March 24, 2023, with MacroStrategy voluntarily prepaying Silvergate around $161 million in full repayment.

An excerpt from the filing reads:

Upon Silvergate’s receipt of the payoff amount, the credit agreement was terminated, and Silvergate released its security interest in all of MacroStrategy’s assets collateralizing the loan, including the Bitcoin that was serving as collateral.

The filing also reveals that MicroStrategy entered into an agreement with two firms Cowen & Company and BTIG to sell $500 million worth of its combined class A common stock. The most recent data show that the company issued and sold a total of 1,348,855 shares under the sales agreement, earning it a total of almost $339 million.

Meanwhile, Michael Saylor continues his support for the big crypto with the pinned tweet from 2022 on his Twitter page saying Bitcoin feeds on the “fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy.”

#Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy.

— Michael Saylor⚡️ (@saylor) September 18, 2020

In recent days, the Bitcoin maximalist has fiercely defended his favorite crypto while criticizing banks following the ongoing global financial crisis. After the fall of Silicon Valley, Signature, and Silvergate banks, Saylor posted charts on Twitter showing that Bitcoin has been outperforming the S&P 500 index, Nasdaq, Gold, Bonds, and Silver since August 2020.

According to Saylor, Bitcoin is unstoppable because it works all the time.

#Bitcoin is a bank that can't lend out, invest, gamble, dilute, debase, freeze, or seize your assets. It works all the time, everywhere in the world, and is unstoppable.

— Michael Saylor⚡️ (@saylor) March 13, 2023

At the time of writing, Bitcoin (BTC) was trading at $27,028, down 3% on the day. Microstrategy (MSTR) was exchanging hands at $237.70, after losing 7% of its value in the last 24 hours.