Michael Saylor’s Bitcoin strategy is once again under scrutiny. The firm boasts a reserve of 717,131 BTC, the highest by a corporate holder. That holding was acquired for roughly $54.52 billion at an average cost of $76,027 per coin. With Bitcoin currently trading around $67,000, Strategy is now more than 10% below its average Bitcoin purchase price.
Recent estimates have confirmed that the firm currently holds over $6 billion in unrealized losses on Bitcoin. These conditions have raised questions about whether the company’s financial obligations could force it to liquidate part of its holdings if market pressure continues.
Michael Saylor’s Strategy Adds 855 BTC Amid Bitcoin Brief Crash Below Its Average Buy Price
Strategy’s Preferred Stock and Convertible Notes Obligations
In an analysis today, Arkham highlighted when Strategy could be forced to sell its Bitcoin holdings. First, Arkham highlighted that Strategy raised capital for its Bitcoin accumulation through several preferred stock offerings, including STRK, STRF, STRD, STRC and STRE. These instruments generally carry dividend rates between 8% and 10% and are subject to dividend payments and redemptions.
However, dividend payments on these preferred shares are legally optional. Redemptions are also at the company’s discretion, according to Arkham. This means that if cash becomes tight, Strategy is not required to sell Bitcoin to meet those dividend payments. The preferred stock structure creates financial pressure, but it does not create an automatic trigger for liquidation.
The more significant obligation lies in Strategy’s convertible notes. The company has approximately $8 billion in outstanding convertible debt and holds about $2.5 billion in cash to help service those commitments.
Convertible notes differ from preferred shares because they are legally enforceable debt. Strategy must either repay the principal at maturity or allow holders to convert the debt into company stock. Some notes also carry coupon payments. This is where potential risk emerges. If the company cannot refinance or convert these obligations, it may need to find another source of funds.
When Strategy Could Sell Bitcoin
Per Arkham, each convertible note has a defined conversion price tied to Strategy’s common stock. If the company’s stock trades above that price at maturity, holders could repeat the playbook from Strategy’s 2027 convertible notes, which they converted into shares rather than requiring repayment. In that case, no Bitcoin sale was needed.
If the stock price falls below conversion levels, Strategy could attempt to refinance its debt, as it has historically, through new convertible notes, common stock sales, and preferred share issuances. Refinancing would allow Strategy to extend maturities rather than repay principal immediately.
The analytics platform suggested that a forced Bitcoin sale would likely occur only if Strategy’s stock remains below conversion levels, refinancing fails, and cash reserves are insufficient to meet obligations. The risk therefore depends heavily on Bitcoin’s price and Strategy’s ability to access funding. A sharp and prolonged drop in Bitcoin could increase financial strain, especially if it weakens both the company’s balance sheet and investor confidence.
Saylor’s average Bitcoin purchase price, while often cited, does not by itself create a financial obligation. Much of Strategy’s Bitcoin was funded through equity issuance, which does not require repayment. Besides, Saylor has revealed plans to equitize the firm’s convertible debt over the next three to six years, thus reducing its debt burden. Therefore, as long as Strategy can manage its convertible note maturities and maintain access to capital markets, being underwater should not lead to liquidation.
According to recent disclosure, Strategy boasts that it can meet its debt obligations even if Bitcoin slumps to $8,000.
Michael Saylor’s Strategy Says It Can Cover Debt Even If Bitcoin Crashes to $8,000
Temitope Olajide
The CoinRemark Team
