Strategy Inc. Capital Stack Stresses as Bitcoin Falls

Strategy Inc., formerly MicroStrategy, holds 847,363 BTC acquired for $64.10 billion, an average cost of about $75,651 per coin. With the treasury now valued at about $54.7 billion, the holdings sit roughly $9.4 billion, or 14.6%, below cost.

The company’s preferred-funded capital stack is fully in place during this drawdown. Strategy reports its Bitcoin as unencumbered and its core debt is senior unsecured, so there is no single market price that would trigger an automatic liquidation of the treasury. Primary exposures are liquidity needs, carry costs and ongoing access to capital markets.

Annual preferred dividend obligations total roughly $1.7 billion. Noteholder put dates begin in 2027. Strategy maintains a management-designated USD reserve of about $1.4 billion that is not held in escrow and would cover only a limited number of dividend payments on its own.

On a headline basis, the company’s market-cap-to-gross-Bitcoin ratio screens near 0.76x, below an estimated breakeven around 1.22x at which the firm’s accumulation has been accretive. After subtracting debt and preferred claims, common shares trade at a premium to the residual net asset value attributable to common shareholders. That residual claim is levered and tends to fall faster than Bitcoin when prices decline.

The software business produced revenue and gross profit but did not generate positive operating cash flow in 2025. The operating cash shortfall has been addressed with capital issuance. A growing share of new capital is being used to service dividend and interest obligations rather than to purchase additional Bitcoin.

Issuing preferred securities to meet cash needs raises future dividend burdens and can lead to further reliance on capital markets. That pattern reduces net buy pressure into spot Bitcoin while sales of common stock to raise cash dilute existing shareholders.

Some analysts outline a gradual downside path comprising ongoing dilution, enlargement of senior claims on the balance sheet, drawdown of the USD reserve and occasional Bitcoin sales timed to liquidity needs while the company awaits a price recovery. An alternative scenario requires a Bitcoin price rebound and continued access to issuance markets to preserve holdings without large asset sales.

Four observable points are that common shares still trade above residual NAV, the common claim is levered, the gross-NAV premium that supported accumulation has compressed, and the capital structure depends on continued issuance. The path of Bitcoin’s price and investors’ willingness to fund the stack will determine whether the company maintains its holdings or reduces them through dilution or sales.