MicroStrategy, now officially rebranded as Strategy, has shifted from being a software analytics firm into what is effectively the world’s largest corporate Bitcoin vault. Under executive chairman Michael Saylor, the company has accumulated 629,376 BTC, spending more than $33 billion in the process. Almost none of that capital came from its core business. Instead, it relied on convertible debt offerings, equity sales, and more recently, preferred stock programs to fund its purchases.
At an average purchase price of roughly $73,320 per coin, the company’s total cost basis stands at about $46.15 billion. Right now, Saylor’s bet is paying off as Bitcoin is trading today well over $110,000. At a market price of $40,000, however, that Bitcoin is valued at just over $25 billion. This would create a paper loss of more than $20 billion. This raises the question – could Strategy survive if Bitcoin were to remain below the $40,000 threshold for a prolonged period?
The Debt Structure Behind the Bitcoin Bet
Strategy has about $8.21 billion in unsecured convertible notes outstanding. These bonds carry little or no interest, some convert into shares if the stock price rises, and none use Bitcoin as collateral. Because of that structure, lenders cannot issue margin calls when Bitcoin falls. A market downturn does not force the company to liquidate its holdings.
The company’s annual cash interest obligations amount to only about $35 million. This is a relatively small figure compared with the billions of dollars in Bitcoin that Strategy holds on its balance sheet. The nearest maturity comes in 2028, when about $1 billion is due. Larger tranches follow in 2029 and 2030. This includes a $3 billion zero-coupon bond and a $2 billion zero-coupon bond. These will be easy to roll over if markets remain receptive to the company’s securities. But if capital markets close and Bitcoin stays depressed, Strategy will need to sell part of its Bitcoin to repay debt.
$300 Million in Annual Preferred Dividends Threatens Liquidity in a Prolonged Downturn
While the bond interest is modest, preferred stock dividends present a heavier annual burden. In 2025, Strategy launched several perpetual preferred programs with cash yields reaching as high as 10%. Together they now require about $300 million in annual dividend payouts.
Two of these preferred shares accumulate unpaid dividends, forcing Strategy to meet larger obligations later, while another lets the board skip payments entirely. These structures give Strategy some flexibility, but the cumulative dividends create a long-term pressure point if Bitcoin remains low for years.
Michael Saylor’s Strategy has also relied heavily on selling stock when the company’s share price trades at a premium to the value of its Bitcoin. At one point, the firm authorized up to $21 billion of new stock sales through “at-the-market” offerings. All of the proceeds were directed into Bitcoin purchases.
In 2025, the company set stricter rules for selling new shares. Management ruled out equity issuance when the stock trades below 2.5 times its modified Net Asset Value. Between 2.5 and 4 times, the company allows limited issuance. Above 4 times, it sells more aggressively. This new framework means that if Bitcoin falls and investor enthusiasm wanes, equity financing may slow or even halt entirely.
Strategy’s original software analytics business still operates, but it contributes relatively little to the company’s operational strategy today. It generates about $464 million in annual revenue, showing flat growth and minimal profit. While it can cover the company’s modest bond interest costs, it cannot support the preferred dividends or provide new capital for Bitcoin purchases. Analysts often describe it as a “zombie” business that exists largely to give Wall Street a corporate vehicle for Bitcoin exposure.
No Margin Calls Today, But Future Refinancing Could Force Bitcoin Sales
So far, Strategy has avoided liquidating Bitcoin to manage its balance sheet. The only sale on record was in December 2022 when it sold 704 BTC to harvest tax losses. The company purchased more Bitcoin again shortly thereafter. Because Strategy’s debt is unsecured and not collateralized by Bitcoin, there is no immediate risk of forced liquidation even if Bitcoin were to remain at $40,000 for an extended period. At that price, the company’s Bitcoin holdings are still worth more than three times its outstanding debt. That provides a comfortable cushion. The real risk lies in its ability to refinance or service preferred stock obligations if capital markets tighten and Bitcoin did not recover.
What Could Break the Model?
The company’s model depends on three conditions. Bitcoin must eventually appreciate over the long term. Capital markets must remain open so that new debt or equity financing can be raised. Preferred dividends must continue to be paid, or at least managed, without eroding liquidity. If any of these conditions fail simultaneously, Strategy may be forced to do the one thing Michael Saylor has long insisted he would never do: sell Bitcoin.
Michael Saylor’s $33 billion Bitcoin bet has turned Strategy into the largest corporate holder of digital assets in the world. Even at $40,000 per Bitcoin, the company still appears solvent, with more than enough BTC to cover its debt. But beneath the surface, its balance sheet relies on a cycle of refinancing and equity issuance.
If Bitcoin were to stay depressed for years, and if capital markets were to turn against the company, then upcoming debt maturities and dividend obligations could eventually force Strategy to part with some of its Bitcoin holdings.
