{"id":24350,"date":"2025-05-28T17:28:39","date_gmt":"2025-05-28T14:28:39","guid":{"rendered":"https:\/\/forklog.com\/en\/trump-media-to-raise-2-5bn-to-buy-bitcoin\/"},"modified":"2025-05-28T17:28:39","modified_gmt":"2025-05-28T14:28:39","slug":"trump-media-to-raise-2-5bn-to-buy-bitcoin","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/trump-media-to-raise-2-5bn-to-buy-bitcoin\/","title":{"rendered":"Trump Media to raise $2.5bn to buy bitcoin"},"content":{"rendered":"<div class=\"wp-block-text-wrappers-keypoints article_keypoints\">\n<ul class=\"wp-block-list\">\n<li>Trump Media &#038; Technology Group will raise $2.5bn via an issuance of common stock and convertible notes to acquire digital gold.<\/li>\n<li>The execution of the bitcoin strategy resembles a pyramid propped up by a premium of the securities over the value of the coins.<\/li>\n<li>An analyst drew parallels between MSTR and Grayscale\u2019s GBTC.<\/li>\n<\/ul>\n<\/div>\n<p>Trump Media &#038; Technology Group (TMTG), the parent of U.S. president Donald Trump\u2019s social network Truth Social, on May 29 <a href=\"https:\/\/www.globenewswire.com\/news-release\/2025\/05\/27\/3088703\/0\/en\/Trump-Media-Announces-Approximately-2-5-Billion-Bitcoin-Treasury-Deal.html\">will place<\/a> roughly $1.5bn of common stock and $1bn of secured convertible notes.<\/p>\n<p>Around 50 institutional investors, with whom agreements have been reached, will purchase the securities.<\/p>\n<p>Proceeds will fund a bitcoin treasury.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201cWe view digital gold as the culmination of financial freedom. [\u2026] The investments will create synergies with subscription payments, <\/em><em>utility tokens<\/em><em> and other planned transactions in Truth Social and Truth+,\u201d<\/em> the statement said.<\/p>\n<\/blockquote>\n<p>The offering will expand the company\u2019s balance sheet 4.3 times; it stood at $759m at the end of the first quarter.<\/p>\n<p>Cantor Fitzgerald &#038; Co. acted as financial adviser to the deal. Earlier, Brandon Lutnick became the firm\u2019s chairman and CEO, the son of former head Howard Lutnick, who this year <a href=\"https:\/\/forklog.com\/en\/news\/cryptocurrency-advocate-howard-lutnick-appointed-as-us-commerce-secretary\">took office as<\/a> U.S. commerce secretary.<\/p>\n<p>Crypto.com and Anchorage Digital will serve as custodians of the coins.<\/p>\n<p>On May 26 the Financial Times, citing informed sources, <a href=\"https:\/\/www.ft.com\/content\/cc55d091-0b28-40bb-a11c-e32d4e121ca3\">reported<\/a> that TMTG planned to raise $3bn via a securities offering. Trump Media denied this.<\/p>\n<p><script async src=\"https:\/\/telegram.org\/js\/telegram-widget.js?22\" data-telegram-post=\"forklog\/44247\" data-width=\"100%\"><\/script><\/p>\n<p>TMTG will join the roster of companies that have adopted a bitcoin strategy. According to <a href=\"https:\/\/bitcointreasuries.net\/\">BitcoinTreasuries<\/a>, there are 114 such organisations, holding a combined 807,853 BTC (3.85% of supply). The leader is Strategy with 580,250 BTC ($63.2bn).<\/p>\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/1-1584.webp\" alt=\"1-1584\" class=\"wp-image-259519\"\/><figcaption class=\"wp-element-caption\">Data: BitcoinTreasuries.<\/figcaption><\/figure>\n<h2 class=\"wp-block-heading\"><strong>Signs of a pyramid?<\/strong><\/h2>\n<p>A user going by Lowstrife shared concerns in a thread about how such large-scale buying of digital gold could ultimately \u201cblow up\u201d the whole structure.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">Bitcoin treasury companies are all the rage this week. MSTR, Metaplanet, Twenty One, Nakamoto.<\/p>\n<p>I think they&#39;re toxic leverage and the worst thing which has ever happened to bitcoin &amp; what bitcoin stands for. In the right conditions, here&#39;s the mechanism of how this blows up<\/p>\n<p>1\/n <a href=\"https:\/\/t.co\/3I4NNAs0Le\">pic.twitter.com\/3I4NNAs0Le<\/a><\/p>\n<p>\u2014 lowstrife (@lowstrife) <a href=\"https:\/\/twitter.com\/lowstrife\/status\/1925717037915005357?ref_src=twsrc%5Etfw\">May 23, 2025<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The specialist pointed to rising leverage at Strategy and firms copying it, fuelled by a constant wave of securities issuance that dilutes existing shareholders.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201c[This method] works great if <span data-descr=\"market net asset value\" class=\"old_tooltip\">mNAV<\/span> &gt; 1. The problem is that the leverage relies on <span data-descr=\"at-the-market offering of common stock\" class=\"old_tooltip\">ATM<\/span> to fund mandatory payments. If MSTR trades below 1 mNAV as it did in 2022, there\u2019s a problem,\u201d<\/em> Lowstrife noted.<\/p>\n<\/blockquote>\n<p>He highlighted a management habit of pushing securities payments into the future, which ultimately creates side effects.<\/p>\n<p>For the common stock, bitcoin\u2019s price appreciation may not offset lower returns from fresh issuance. For the convertible debt, refinancing or selling some coins may be required.<\/p>\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/2-1117.webp\" alt=\"2-1117\" class=\"wp-image-259520\"\/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/x.com\/lowstrife\/status\/1925717054415393120\/photo\/1\">X<\/a>.<\/figcaption><\/figure>\n<p>With <span data-descr=\"preferred shares\" class=\"old_tooltip\">preferreds<\/span> comes the need to pay dividends. Issuance of such securities and their cash flows would be financed by diluting common shareholders.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201c<span data-descr=\"Strategy preferred shares\" class=\"old_tooltip\">STRF<\/span> is a perpetual 10% security. Strategy will constantly tap the ATM to fund every dollar issued. Forever. Purchases made today at the expense of future shareholders. What does this look like?\u201d<\/em> the analyst asked.<\/p>\n<\/blockquote>\n<p>Lowstrife stressed the dependence on market conditions. He noted there is an option to suspend dividend payments, but deemed activation unlikely, as it would be seen as a sign of potential insolvency.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201cHow does this end? It all starts with mNAV. mNAV is everything. [\u2026] If it breaks, the company\u2019s ability to raise capital weakens. Conversion hurts mNAV. The company loses the ability to make financial payments on its debt,\u201d<\/em> he forecast.<\/p>\n<\/blockquote>\n<p>Lowstrife flagged risks for Strategy from the rising number of corporates adopting a bitcoin strategy. He drew parallels with Grayscale\u2019s GBTC, which lost its uniqueness after spot ETFs launched. The share premium vanished, as did demand, along with a drubbing for mNAV.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"615\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/3-626-1024x615.png\" alt=\"3-626\" class=\"wp-image-259521\" srcset=\"https:\/\/forklog.com\/wp-content\/uploads\/3-626-1024x615.png 1024w, https:\/\/forklog.com\/wp-content\/uploads\/3-626-300x180.png 300w, https:\/\/forklog.com\/wp-content\/uploads\/3-626-768x461.png 768w, https:\/\/forklog.com\/wp-content\/uploads\/3-626.png 1333w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/x.com\/lowstrife\/status\/1925717074946462042\/photo\/1\">X<\/a>.<\/figcaption><\/figure>\n<p>The expert reiterated that mNAV is entirely sentiment-driven. There is no mechanism or reason forcing it to match asset value.<\/p>\n<p>He noted the risk of the metric compressing below 1, shrinking scope for capital raising and new coin purchases. The need to pay dividends in adverse markets could make matters worse.<\/p>\n<p>The picture is complicated by $8.2bn of convertible bonds maturing in 2028\u20132032. If the common stock price fails to reach conversion levels, Strategy will have to refinance or repay by selling coins.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cThis is not a revolution. It\u2019s financial pyramids chasing leverage. I\u2019m a HODLer. It makes me really sad to see [Michael Saylor] recycling the financial engineering of 2008 which led to the creation of digital gold,\u201d Lowstrife concluded.<\/p>\n<\/blockquote>\n<p>Jess Myers of Moon has forecast that the share of bitcoin on public companies\u2019 balance sheets could rise <a href=\"https:\/\/forklog.com\/en\/news\/forecast-corporations-to-hold-half-of-all-bitcoins-in-20-years\">to 50% by 2045<\/a>.<\/p>\n<p>According to Bitwise, by end-2026 institutional holders, including governments and corporates, will control <a href=\"https:\/\/forklog.com\/en\/news\/bitwise-predicts-institutional-holdings-of-bitcoin-to-reach-20-by-2026\">20% of total supply<\/a> (~4.2m BTC).<\/p>\n<p>Earlier, Bernstein <a href=\"https:\/\/forklog.com\/en\/news\/bernstein-forecasts-corporate-bitcoin-holdings-to-reach-330-billion\">predicted<\/a> corporate bitcoin reserves would climb to $330bn by 2029.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Trump Media &#038; Technology Group will raise $2.5bn via an issuance of common stock and convertible notes to acquire digital gold. The execution of the bitcoin strategy resembles a pyramid propped up by a premium of the securities over the value of the coins. An analyst drew parallels between MSTR and Grayscale\u2019s GBTC. Trump Media [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":24349,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"","news_style_id":"","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1538,991,1207,1150,1138,1211],"class_list":["post-24350","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-bitcoin-purchase","tag-donald-trump","tag-microstrategy","tag-news-plus","tag-opinions","tag-stock-market"],"aioseo_notices":[],"amp_enabled":true,"views":"37","promo_type":"","layout_type":"","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/24350","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=24350"}],"version-history":[{"count":0,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/24350\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/24349"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=24350"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=24350"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=24350"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}