The post Can Strategy Survive a Bitcoin Crash? The Company’s Risky Capital Model Under Scrutiny appeared on BitcoinEthereumNews.com.

MicroStrategy Incorporated, recently renamed as Strategy, is the largest publicly traded corporate owner of Bitcoin, with 528,185 BTC purchased at an average price of $67,458, with total acquisition cost of $35.63 billion.  As of April 2025, its Bitcoin holdings are worth around $41.3 billion, with the most recent purchase of 22,048 BTC for $1.92 billion on March 30 at $86,969 per BTC. Bitcoin is now Strategy’s main treasury reserve asset, and its BTC Yield—a key performance indicator  measuring Bitcoin per share—rose 11% YTD during Q1, aiming for 15% annually to 2027. Microstrategy SEC filing SEC filings in recent times point to the volatility that comes with Strategy’s Bitcoin model. During Q1 2025, the firm had a $5.91 billion unrealized loss caused by a price fall to $77,351, which was offset by a $1.69 billion tax benefit.  The capital structure of the company is comprised of $8.65 billion raised in the form of equity and debt since 2020, for funding continuous Bitcoin acquisitions. The highlight was raising $2 billion in February 2025 using zero-coupon convertible notes that are due in 2030. Strategy also went public with a preferred stock (STRK) offering during Q4 2024 and raised $584 million. In spite of volatility, the firm’s overall Bitcoin holding is still in profit with an unrealized gain of 14.62%. Its software segment still lags behind, reporting $120.7 million in Q4 2024 revenue, down 3% YoY, and failing to produce positive operating cash flow. The firm depends greatly on financing for its operations and Bitcoin acquisitions, having done a 10-for-1 stock split in July 2024 to increase share availability. Liquidation risk is contained at present. With $8.2 billion in unsecured loans and no collateralized loans for Bitcoin, Strategy could potentially repay all of its debt by selling 15% of its BTC at current market…

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Filed under: News - @ April 14, 2025 4:10 am