Microstrategy is raising $42 billion — almost its entire market value — to buy more bitcoin

Microstrategy has been piling into bitcoin for years, but its latest investment is huge even by its standards.

The company, led by chairman, founder, and bitcoin evangelist Michael Saylor, said it plans to raise $42 billion to buy more bitcoin.

That amount is just shy of MicroStrategy’s entire market value of about $45 billion.

“Our focus remains to increase value generated to our shareholders by leveraging the digital transformation of capital,” MicroStrategy CEO Phong Le said in a press release.

The software company said it plans to raise the $42 billion via an equal-split of stock and debt sales over the next three years.

The company filed a $21 billion at-the-market offering with the SEC on Wednesday. This type of offering allows the company to sell stock directly into the market at its discretion and add the proceeds to its balance sheet.

With MicroStrategy stock trading near its highest level since the dot-com bubble peak of March 2000, it’s a good time for the company to sell more stock, especially considering the struggles facing its underlying software business.

MicroStrategy lost about $433 million on revenues of $116 million in the third-quarter. The company’s revenue was down 10% year-over-year in the quarter, notching its fourth consecutive quarter of year-over-year revenue declines.

Whether it’s a smart move for MicroStrategy to bet its entire market value on bitcoin rather than invest in its underlying business will hinge on the price of bitcoin.

So far, the bitcoin play has worked out.

Bitcoin traded above $70,000 on Thursday, just below its all-time high of nearly $74,000.

MicroStrategy has been on a bitcoin buying spree since 2020, accumulating about 252,000 bitcoins at an average cost basis of $39,266 per bitcoin.

As of September 30, MicroStrategy’s bitcoin holdings were worth $16 billion, about one-third of the company’s overall market value.