Bitcoin News Today: S&P's B- Cites Bitcoin-Dollar Mismatch Risk

S&P Global Ratings has assigned a B- issuer credit rating to Strategy Inc. (NASDAQ: MSTR), formerly MicroStrategy, according to Cointelegraph, citing concerns over the company's heavy reliance on Bitcoin, limited business diversification, and liquidity mismatches. The rating, which places Strategy in speculative, non-investment-grade territory—often termed "junk bond" status—marks the first such assessment for a Bitcoin treasury-focused firm and highlights the risks inherent in its business model.

The B- rating reflects S&P's evaluation of Strategy's narrow business focus, with its balance sheet dominated by Bitcoin holdings of approximately 640,808 coins, valued at over $73 billion as of June 30, 2025, according to GuruFocus. The company has accumulated these assets primarily through equity and debt financing, including $8 billion in convertible bonds, with $5 billion currently "out of the money" and maturing starting in 2028, Coinotag reported. S&P warned that a sharp decline in Bitcoin prices before these maturities could force Strategy to sell Bitcoin at depressed values or restructure its debt, creating liquidity strain.

A key concern for S&P is the "currency mismatch" between Strategy's U.S. dollar-denominated obligations—such as $640 million in annual preferred dividends—and its Bitcoin-backed assets. The ratings agency noted that Strategy's operating cash flow was -$37 million in the first half of 2025, with nearly all of its $8.1 billion in pre-tax earnings derived from unrealized Bitcoin gains, which do not generate cash flows, as detailed by MiamiDaily. This structure leaves the company vulnerable to market volatility, as declines in Bitcoin's price could erode its equity buffer and trigger liquidity crises.

S&P also highlighted Strategy's "significantly negative" risk-adjusted capital (RAC) ratio, calculated by deducting Bitcoin holdings from equity value due to the cryptocurrency's market risk. While Strategy's Bitcoin treasury exceeds its debt obligations, the agency emphasized that its capital structure remains precarious without consistent cash flow generation. The company plans to fund preferred dividends via at-the-market equity sales, but deferring payments could incentivize preferred shareholders to demand board representation or higher rates, complicating capital management, a point noted by Lookonchain.

Despite these risks, S&P assigned a stable outlook, assuming Strategy will manage convertible debt prudently and maintain dividend payments. The agency noted that an upgrade would require stronger U.S. dollar liquidity, reduced reliance on convertible debt, and proof of capital market access even during Bitcoin downturns. Conversely, a downgrade could follow if Bitcoin prices collapse or capital market access weakens.

Strategy's B- rating sets a benchmark for traditional finance to evaluate Bitcoin-centric firms. The company, which rebranded from MicroStrategy in 2025, has become a pioneer in corporate Bitcoin adoption, purchasing assets to boost shareholder value. However, its aggressive strategy has drawn scrutiny as credit agencies grapple with how to assess firms with unconventional balance sheets. S&P's analysis underscores the challenges of aligning volatile crypto assets with stable, dollar-denominated liabilities—a dilemma likely to shape regulatory and investor scrutiny of Bitcoin treasury models.