Strategy Faces $6 Billion Loss, May Sell Bitcoin to Meet Debt

Michael Saylor’s software company, Strategy, which has heavily invested in Bitcoin, may soon face the necessity of selling some of its Bitcoin holdings to meet its financial obligations. In an April 7 regulatory filing, the company disclosed that if it fails to secure timely financing, either through equity or debt, it may be forced to sell Bitcoin to meet its financial obligations. The price of Bitcoin significantly impacts the company’s ability to settle its debts, as the majority of Strategy’s assets are in Bitcoin.

For the first quarter of 2025, Strategy expects to report an unrealized loss of nearly $6 billion, despite a $1.69 billion tax benefit. The company has around $8 billion in debt and faces substantial financial pressure with $35 million in annual interest payments and $150 million in yearly dividends. Its software business has not been generating enough revenue to support these obligations.

According to Saylor’s March 31 post, the company holds 528,185 BTC purchased at an average price of $67,458 per coin, acquired for more than $35 billion. If Strategy is unable to secure additional funding, it could result in selling at prices lower than its initial investment. While this situation raises concerns, it is noted that similar warnings have appeared in past filings, meaning it’s not entirely unusual.

To address its liquidity crisis, on March 10, Strategy announced its plan to raise $2.1 billion through the sale of perpetual preferred stock. The funds from this offering will be used to support corporate operations in addition to buying more Bitcoin. The preferred stock, which offers an 8% dividend, will help Strategy raise capital without relying on traditional debt structures. However, the company’s future still heavily depends on how well Bitcoin performs, even if it can secure this new investment.

Bitcoin is trading at roughly $76,000, down 10% over the past week. Despite the bearish outlook, some analysts remain optimistic about Bitcoin’s near-term future. According to the analyst's forecast, central banks everywhere will soon need to lower interest rates, which could lead to an increase in global liquidity. This infusion of liquidity would help Bitcoin as a deflationary asset, raising its price.

Strategy’s warning underscores the potential risks and challenges that the company may face in the coming months. The company’s Bitcoin holdings have decreased in value by $5.9 billion in the first quarter of 2025, and its software business has also been facing challenges. The company has indicated that if it fails to secure equity and debt financing on time, it may have to sell Bitcoin to pay its financial obligations, potentially at prices below its average purchase price. The company anticipates booking an unrealized loss of nearly $6 billion for the first quarter. However, this will be partially offset by a $1.69 billion tax benefit. Still, the company made it clear that if Bitcoin’s price continues to trend downward, it could jeopardize Strategy’s ability to meet its financial commitments. At the close of Q1, Strategy was carrying around $8 billion in debt, with $35 million in annual interest obligations and another $150 million owed each year in stock-related dividends. While the company remains one of Bitcoin’s largest corporate holders, the road ahead may be more complicated if bearish conditions persist.