Michael Saylor’s bold Bitcoin bet and Strategy’s risk analysis

March 28, 2025

Michael Saylor’s bold Bitcoin bet and Strategy’s risk analysis

Bitcoin maximalist Michael Saylor’s firm, Strategy (formerly MicroStrategy), has extended its Bitcoin buying spree, using debt and equity to build a substantial treasury. This has placed the firm at the forefront of the growing "reserve race" as corporations and nation-states seek to secure a stake in Bitcoin's limited supply. This has caused some to be concerned over whether Strategy can withstand the risks associated with its Bitcoin bet.

Take a look at Strategy’s Bitcoin stockpile

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Graph showing Strategy's Bitcoin Holdings in grey area increasing over time and comparing Strategy cumulative performance in black and Bitcoin cumulative performance in yellow from July 2020 to March 2025.

Bitcoin holdings: Strategy owns 506,137 BTC, worth approximately $43 billion at $85,000 per BTC. This represents about 2.4% of Bitcoin’s total 21 million supply. That also means the company holds nearly half of Bitcoin’s anonymous creator Satoshi Nakamoto’s stash, which is estimated at around 1 million BTC.
Market Cap vs. Bitcoin value: Strategy’s market cap is $84 billion, nearly twice the value of its Bitcoin holdings, reflecting a 92% premium to its Bitcoin net asset value (NAV).
Acquisition cost & gains: The firm purchased Bitcoin at an average price of $66,357 per BTC, with $10 billion in unrealized gains at current prices.
Debt & funding: The company holds $8.2 billion in senior unsecured convertible notes and $2.0 billion in preferred stock, using debt to fuel Bitcoin purchases.
The “21/21 Plan”: The company aims to raise $42 billion from 2025-2027 ($21 billion in equity and $21 billion in fixed income), including 10% coupon perpetual preferred shares for retail investors to accelerate Bitcoin accumulation.

Strategy's risk analysis

Strategy’s convertible notes are not backed by Bitcoin, reducing the risk of liquidation if Bitcoin’s price drops. Unlike traditional debt, these notes don’t have restrictions on debt or payment ratios, giving the company more flexibility and protection against forced Bitcoin sales, even in challenging market conditions.

This structure provides significant strength, but it's important to consider the potential impact of a full liquidation. Dividing the total debt ($10.2 billion) by Bitcoin holdings (506,137 BTC) gives a theoretical liquidation price of approximately $20,143 per BTC. While this represents a worst-case scenario, it highlights the company's resilience in the face of market volatility.

That resilience is bolstered by Strategy’s often-overlooked software business, which generates $463.5 million in annual revenue (based on 2024 estimates). This comfortably covers the current $227.9 million in interest and dividend obligations, providing a financial buffer that keeps debt servicing manageable under normal circumstances.

Still, if Strategy were pushed to liquidate a significant portion of its Bitcoin holdings, such as $10.2 billion to repay its debt, it would likely cause short-term market pressure.

Think of the 2024 summer selling from Mt. Gox, Genesis, and the German government, which totaled $16 billion and caused an over 11% decline in crypto market capitalization in a month. However, Bitcoin’s broader market has historically bounced back from such events, suggesting any impact would be temporary.

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