Strategy executives have once again discussed how Bitcoin’s recent decline has affected the company’s financial position. Despite billions of dollars of paper losses at current prices amid the ongoing market downturn, the executives have assured that the company is well-positioned to withstand a potential drop in Bitcoin’s price to $8,000 while continuing to meet its debt obligations.
Strategy’s Plans To Equitize Convertible Debt Over Time
In a post on X on Sunday, Strategy said it could potentially survive an 88% Bitcoin crash to $8,000.
“Strategy can withstand a drawdown in BTC price to $8,000 and still have sufficient assets to fully cover our debt,” the Bitcoin treasury firm wrote.
Strategy, the world’s largest corporate Bitcoin holder, now owns a total stack of 714,644 BTC — worth around $49.2 billion— since adopting it as a treasury asset in 2020. For context, the holdings account for more than 3.4% of Bitcoin’s fixed 21 million supply. However, amid ongoing price weakness, the position now reflects approximately $1.2 billion in unrealized gains at current market levels.
The company’s convertible debt is roughly $6 billion, resulting in a robust “BTC Rating” (coverage ratio) of 8.3×. As such, Bitcoin would need to plummet approximately 88% for the two to be equal to Strategy’s reserve, and the firm would still have enough to honor its debt.
Executive Chairman Michael Saylor posted on X to offer reassurance about the company’s long-term financial commitments. “Our plan is to equitize our convertible debt over the next 3–6 years,” Saylor postulated.
Equitizing convertible debt refers to converting outstanding bond obligations into equity, allowing repayment through newly issued shares rather than cash. While the approach can ease debt-related pressures, it may result in shareholder dilution as additional stock enters circulation.
Earlier this month, Strategy CEO Phong Lee stated during the company’s fourth-quarter earnings webinar that Bitcoin would have to fall to $8,000 and stay at that level for five to six years before it would significantly threaten the firm’s ability to service its convertible debt.
Strategy Down 10% On Its Bitcoin Bet
Strategy’s average acquisition cost per Bitcoin stands at approximately $76,056, while the cryptocurrency is currently hovering at $69,670, indicating an unrealized loss of roughly 10% on the firm’s holdings.
Nonetheless, Saylor hinted at another Bitcoin acquisition by sharing Strategy’s accumulation chart on X on Sunday, a move often interpreted as an indicator of a new purchase.
Source: https://zycrypto.com/michael-saylors-strategy-declares-it-can-comfortably-survive-even-if-bitcoin-crashes-to-8000/
