Strategy plans to convert $6 billion of convertible bond debt into equity over the next three to six years, a move founder Michael Saylor said would strengthen the balance sheet and reduce leverage.
The company said it could withstand a decline in Bitcoin to $8,000, an 88% drop from current levels, and still have sufficient assets to fully cover its outstanding debt.
“Strategy can withstand a drawdown in BTC price to $8,000 and still have sufficient assets to fully cover our debt,”
The firm stated on X.
Strategy currently holds 714,644 BTC valued at roughly $49 billion, compared with about $6 billion in convertible debt, meaning the cryptocurrency would need to fall sharply before liabilities matched reserves.
Equitising convertible debt would convert bondholders into shareholders rather than requiring cash repayment, easing debt pressure but potentially diluting existing investors, and following the announcement the Strategy share price was up 8.8% at $133.88.
The company’s average Bitcoin purchase price is about $76,000, leaving it roughly 10% underwater with BTC trading near $68,400, even as Saylor signalled another potential purchase that would mark a 12th consecutive week of accumulation.
Despite the recent rally, Strategy shares remain down 70% from their mid-July peak of $456, while Bitcoin itself has fallen about 50% from its early October high, underscoring the volatility underpinning the firm’s treasury strategy.
At the time of reporting, Bitcoin price was $68,319.49.