Trump Media Group emulates MicroStrategy by launching a $2.5 billion Bitcoin treasury plan, with the presidential family heavily involved in financial instruments.

Author: Weilin, PANews

The Trump family's calculations in the coin circle are becoming louder. On the evening of May 27, Trump Media & Technology Group announced it would launch a financing plan of up to $2.5 billion to incorporate Bitcoin into the company's treasury assets. The company has reached subscription agreements with about 50 institutional investors and plans to raise funds by issuing approximately $1.5 billion in common stock and $1 billion in zero-coupon convertible bonds, with a conversion price equivalent to a 35% premium.

According to the official documents submitted by Trump Media Technology on May 27, this financing will be used to purchase Bitcoin, as an important component of the company's balance sheet, held together with existing cash, cash equivalents, and investment assets. As of the end of the first quarter of 2024, these assets total $759 million**.**

After denying media reports, the official announcement was made, and the stock price fell by 10.38% in a single day.

"We view Bitcoin as the top tool for financial freedom, and today Trump Media Company also considers cryptocurrency an important component of our assets," said Devin Nunes, CEO and Chairman of Trump Media, in a press release. "This is the 'crown jewel' asset of our first acquisition, and this investment will help the company withstand the harassment and discrimination from financial institutions – a common issue faced by many Americans and American businesses, while also creating synergies for subscription payments, utility tokens, and other planned transactions on the Truth Social and Truth+ platforms."

The fundraising is expected to be completed around May 29. Crypto.com and Anchorage Digital will provide custody services for the Bitcoin treasury, while Yorkville Securities and Clear Street will act as the main placement agents for this issuance (Placement Agent). Cantor Fitzgerald & Co. serves as the financial advisor.

Affected by the news, the company's stock price briefly rose before the market opened, then turned to decline after the opening on the same day, closing with a drop of 10.38%. The stock has fallen 31% this year. The price of Bitcoin once exceeded $110,000, with mixed reactions in the market.

It is worth noting that earlier on May 27, the Financial Times cited six anonymous sources stating that the Trump Media Technology Group plans to raise $3 billion through stock sales to invest in Bitcoin and other cryptocurrencies. The company strongly denied this, stating that "the foolish reporters of the Financial Times listened to even more foolish sources."

According to a previous report by the Financial Times, the equity is expected to be sold at the market price at the close on May 23. On that day, the stock price of Trump Media (DJT) closed at $25.72, up 4.6% for the day. As of May 23, the market capitalization of Trump Media was $5.7 billion.

Trump Media Technology Group is a company owned by US President Donald Trump, and as of December 17, 2024, Trump holds a total of 52.9% of the shares. The company was incorporated on December 11, 2020 and includes three major brands: Truth Social, Truth+, and Truth.Fi. As of Dec. 20, Trump had transferred about $4 billion worth of his shares in media companies to a trust controlled by his eldest son, Donald Trump Jr. According to a filing with the Securities and Exchange Commission (SEC), Trump was previously the largest shareholder of Trump Media & Technology Group, holding nearly 115 million shares. After the transfer, he will no longer hold any shares directly, but will be the sole beneficiary of the trust. Donald Trump Jr. is also a member of the board of directors of Trump Media.

Imitating MicroStrategy, Trump version of "Bitcoin Vault" model is online

Trump Media Technology's move is widely seen as imitating MicroStrategy's (now renamed Strategy) "Bitcoin reserve" strategy. Led by Michael Saylor, Strategy has continuously purchased Bitcoin since 2020 and has raised funds through financial instruments such as issuing stocks, convertible bonds, and preferred shares, making Bitcoin accumulation its core strategy. As of May 26, according to Strategy's latest disclosure, the company has cumulatively purchased 580,250 BTC, with a total cost of 40.61 billion dollars and an average purchase price of 69,979 dollars, approaching the 70,000 dollar mark.

There are different interpretations of this strategy in the market. Supporters argue that although there are often concerns about the high leverage risks of this strategy, data shows that these concerns are unfounded. Although the total debt of the Strategy is $8.2 billion, the debt interest rate is only 0.421%, and the annual interest expense is just $34 million, coupled with preferred stock dividends, resulting in an overall low leverage cost. Critics, however, believe that this model essentially relies on continuous financing and ongoing dilution of shareholder equity to "pile up" Bitcoin positions, and once market sentiment reverses or the mNAV (representing the current stock price relative to the value of the Bitcoin it holds) falls below 1.0, it will collapse.

Transitioning to financial services and cryptocurrency companies, the president's family plays a big capital game.

In the last quarter, Trump Media's revenue from advertising and other sources was only $820,000, while it lost $32 million.

This time, the $2.5 billion financing plan is an important step for Trump Media Technology to gradually delve into the cryptocurrency field. In April, the media company disclosed its plan to explore utility tokens in a letter to shareholders. Users of the "Truth digital wallet" can use the token to pay for "Truth+ subscription fees" and may also be able to use it to pay for other products and services within the "Truth Social ecosystem" in the future.

On March 24, the Trump Media & Technology Group announced a non-binding agreement with the cryptocurrency exchange Crypto.com to collaborate on launching a series of exchange-traded funds and related products. These ETFs are expected to include digital assets as well as securities focused on American manufacturing, covering various industries such as energy, and are planned to be launched later this year, pending regulatory approval.

As early as January of this year, Trump Media & Technology Group launched Truth.Fi, planning to venture into cryptocurrency investments. The new business is authorized to invest up to $250 million from its cash reserves of over $700 million in traditional investment tools, separately managed accounts (SMA), exchange-traded funds (ETF), Bitcoin, and "similar cryptocurrencies or crypto-related securities."

According to official sources, these SMAs will be developed in collaboration with Charles Schwab, which will also provide extensive advice on investments and strategies for Truth.Fi. These tools and products are expected to focus on investing in growth-oriented, manufacturing, and energy companies in the United States, as well as investments that contribute to strengthening the Patriot Economy.

The latest actions of the Trump Media Technology Group also resonate with the changes in U.S. regulation and cryptocurrency policies. On March 6 of this year, U.S. President Trump signed an executive order announcing the inclusion of Bitcoin in the U.S. strategic reserve. In addition, it was announced that a "U.S. Digital Asset Reserve" would be established, incorporating five cryptocurrencies (Bitcoin, Ethereum, Ripple, SOL, and ADA) into the government asset reserve, and it was reiterated that the U.S. would ensure it becomes the "global cryptocurrency capital."

Overall, Trump's media is moving towards its goal of building a new "Truth Social ecosystem" that integrates media, financial services, and crypto assets through this large-scale financing and Bitcoin reserve strategy. However, whether this series of initiatives will positively boost the crypto industry or plunge it deeper into the political vortex of Washington remains to be further verified by the market and time.