Strategy Inc. founder Michael Saylor said on Sunday that the Bitcoin-hoarding company plans to convert its convertible debt into equity over the next three to six years.
Strategy Won’t Issue New Convertible Notes?
Saylor’s announcement came after Strategy declared that even if Bitcoin’s price dropped to $8,000, the company would still hold enough assets to cover its outstanding debt.
The firm highlighted its balance sheet, with $49 billion in BTC reserves against $6 billion in net debt—calculated as total outside debt minus cash reserves. In a downside scenario where Bitcoin’s price drops 88% to $8,000, the company said the reserves would shrink to about $6 billion, still matching the net debt.
Strategy said it’ll avoid issuing additional senior debt through convertible senior notes. Note that the firm has accumulated over $8.2 billion in debt, primarily through convertible senior notes used to acquire Bitcoin, with no major maturities until 2028.
What Does MTSR’S Math Say?
Saylor said last week the company has 2.5 years of cash to cover dividends and debt without raising money. When asked what would happen if Bitcoin dropped 90% and stayed there for four years, Saylor replied, “We’ll refinance the debt.”
However, critics are not convinced. Economist Peter Schiff wondered if anyone would take Saylor or Bitcoin seriously at $8,000.
Strategy currently holds 714,644 BTC at an average cost of $76,056. At $8,000, those holdings would be worth $5.7 billion against an average acquisition cost of $54.35 billion, resulting in an unrealized loss of $48.6 billion.
Price Action: At the time of writing, BTC was exchanging hands at $68,374.77, down 2.22% over the last 24 hours, according to data from Benzinga Pro.
MSTR shares closed 8.85% higher at $133.88 during Friday’s regular trading session.
The stock shows weak price momentum across short, medium, and long term, earning a very low Momentum ranking in Benzinga's Edge Stock Rankings.