Currently, MicroStrategy holds 553,555 Bitcoins,
accounting for 2.636% of the total BTC, with a cost price of $68,459.
If Bitcoin prices crash, will MicroStrategy face bankruptcy liquidation?
The conclusion is: theoretically possible, but the actual probability is extremely low.
The company's leverage is not high, its debt maturity is long, and the short-term repayment pressure is small. Only an extreme long-term decline in Bitcoin would trigger a financial crisis, and the probability of this happening is low.
Founder Michael Saylor holds 46.8% of the voting rights, preventing the early redemption of preferred shares, ensuring the stability of the company's operational direction.


01. MicroStrategy's Bitcoin Holdings and Strategy
MicroStrategy (now renamed Strategy) has transformed from a traditional software company to the world's largest Bitcoin holding company.

As of April 27, 2025, the company holds approximately 553,555 Bitcoins, with a total cost of approximately $37.9 billion and an average purchase cost of about $68,459 per coin. At current prices, these Bitcoins are valued at approximately $52.5 billion.

MicroStrategy's Bitcoin investment is financed through bond issuance and stock issuance. Its management (represented by co-founder Michael Saylor) views Bitcoin as the company's primary reserve asset, continuously purchasing more Bitcoin through external financing rather than relying on the cash flow from its business.
MicroStrategy primarily raises funds to purchase Bitcoin through the following four methods:

Use own funds to purchase.
This is not the main source of funds; MicroStrategy used about $500 million in total to purchase Bitcoin.

Issuing Convertible Senior Notes
To purchase more Bitcoin, MicroStrategy began financing through the issuance of convertible bonds. Convertible senior notes are a financial instrument that allows investors to convert bonds into company stock under certain conditions.

These bonds are characterized by low interest rates, even zero, while setting a conversion price above the current stock price. Investors are willing to purchase such bonds mainly because they provide downside protection (i.e., the principal and interest can be recovered at maturity) and potential gains when the stock price rises. The interest rates on several tranches of convertible bonds issued by MicroStrategy range from 0% to 0.75%, indicating that investors are confident in the future rise of MSTR's stock price, hoping to convert the bonds into shares for greater returns.

Issuing Senior Secured Notes
In addition to convertible senior notes, MicroStrategy also issued a $489 million senior secured note with a 6.125% interest rate maturing in 2028. Senior secured notes are a type of secured bond, which carries less risk than convertible senior notes, but these bonds only offer fixed interest income. MicroStrategy has already chosen to repay this batch of senior secured notes early.

At-the-Market Equity Offerings
MicroStrategy raised funds to purchase Bitcoin through At-the-Market Equity Offerings (ATM). This method does not incur debt but dilutes existing shareholder equity. However, the reason existing shareholders agree to this method of issuance is that the company has proposed a new metric - BTC Yield (Bitcoin Yield), which is the amount of Bitcoin earned per share, calculated as the ratio of Bitcoin holdings to diluted total equity.

During bull markets, raising funds by issuing new shares to purchase Bitcoin may lower the shareholders' ownership percentage, but the Bitcoin content per share will increase. Overall, the total amount of Bitcoin held by shareholders may still increase. For example, in 2024, MicroStrategy's BTC Yield reached 74.3%, meaning the number of Bitcoins per share increased by 74.3%. As of August 2, 2024, MicroStrategy's BTC Yield was 12.2%. The company plans to set a target BTC Yield of 4% to 8% per year over the next three years.

02. Key Financial Data Analysis

Bitcoin Holdings and Valuation
As of April 27, 2025, the book value of Bitcoin held by MicroStrategy is approximately $37.9 billion (after impairment), while the market price valuation is approximately $52.5 billion.
Due to the accounting standards adopted by the company, if the Bitcoin price falls below $30,000, the company will have to further recognize impairment, which may exacerbate stock price pressure.

Debt Level
MicroStrategy currently has a total debt of approximately $7.26 billion, primarily in convertible bonds with low coupon rates, some even at 0%.
Of which:
Due December 2025: $650 million, coupon 0.75%
Due February 2027: $1.05 billion, coupon 0%
Due December 2029: $3 billion, coupon 0%
Due to some convertible bonds having a conversion price lower than the current stock price, these bonds are more likely to be converted into stock rather than demanding cash repayment, so short-term debt risk is low.
But if Bitcoin prices continue to be sluggish in the future, and MicroStrategy's stock price falls below the conversion price, bondholders may demand cash repayment, which will increase the company's cash flow pressure.

Cash Flow and Liquidity
By the end of 2024, the company's operating cash flow net outflow was $53 million, with only $46.8 million in cash reserves, indicating that MicroStrategy has almost no cash buffer.

By the end of 2024, the company raised $15.1 billion through stock issuance, but if the stock price falls, the company's future financing capacity may be affected.

In 2025, the company also issued a batch of preferred shares with a 10% dividend rate (previously expected to be 8%), indicating that financing costs have begun to rise.

Profitability
The company's software business revenue growth has stagnated, with software revenue declining by 6.09% year-over-year in 2024, contributing only about $121 million in total revenue from software business.
The company relies on the book gains from Bitcoin investments, but due to impairment rules, the profit in financial reports fluctuates significantly, making it difficult to establish a stable profit model.
In the future, if Bitcoin prices do not continue to rise, the company may remain in a state of long-term losses, further increasing financing pressure.

Stock Price Trends and Correlation with Bitcoin
In recent years, the correlation between MicroStrategy's stock price and Bitcoin price has reached 0.7 to 0.8, almost becoming a Bitcoin leveraged ETF.

By the end of 2024, when Bitcoin hit a historical high (close to $100,000), MicroStrategy's stock price also soared above $500. However, after Bitcoin corrected, the company's stock price plummeted 50% in a short time.

Due to the leverage effect of the company's Bitcoin holdings, MicroStrategy's stock price volatility tends to be greater than that of Bitcoin itself. For instance, when Bitcoin dropped 40% at the beginning of 2025, MicroStrategy's stock price fell over 55%.

Currently, the market valuation of MicroStrategy is generally higher than the net value of its Bitcoin holdings, and some investors are willing to pay a premium to indirectly invest in Bitcoin through MSTR. However, if the Bitcoin price falls, this premium may disappear, and there may even be cases of trading below net value.

The possibility of bankruptcy or financial crisis
In the short term, MicroStrategy still has strong debt repayment capacity, but if Bitcoin enters a prolonged bear market, it could trigger financial difficulties.

Assets vs. Liabilities Ratio: The company currently holds $52.5 billion in Bitcoin, far exceeding its $7.26 billion in debt, which presents little short-term repayment pressure. However, if the Bitcoin price drops to $12,000 to $15,000, the company's Bitcoin assets would fall below its total debt, leading to potential technical bankruptcy.

Debt Maturity Risk: The $650 million debt maturing in 2025 may be resolved through equity conversion, but over $4 billion in debt will mature from 2027 to 2029. If Bitcoin remains low at that time, MicroStrategy may struggle to refinance through stock issuance or new debt, potentially needing to sell Bitcoin to repay debt.

Management's Position: Michael Saylor controls 46.8% of the voting rights, which can prevent the company from selling Bitcoin or changing its strategy. However, if Bitcoin's price falls below a certain critical point, the company may be forced to take emergency measures, including selling some Bitcoin, restructuring debt, or even considering bankruptcy protection.

The long-term benefit of converting debt is:
- MSTR has no short-term debt repayment pressure and has ample time to wait for its 'Bitcoin strategy' to take effect.

- Due to the premium on the conversion price of convertible debt, immediate dilution of shareholder equity can be avoided. When the convertible debt matures, if the Bitcoin price rises to the conversion price, MSTR must issue shares; however, due to the higher conversion price, the dilution effect on shareholders is limited. Conversely, if the Bitcoin price is below the conversion price, MSTR only needs to repay the debt at the lower Bitcoin price, which means MSTR repays fewer Bitcoins than it initially purchased with debt.

- MSTR usually maintains a relatively conservative leverage level of about 30% of Bitcoin net assets and flexibly adjusts equity and debt as needed to keep leverage at a reasonable ratio while seizing more fundraising opportunities.

For example, in December 2022, when the Bitcoin price plummeted to $17,000 per coin, MSTR's leverage ratio soared to around 1. To reduce leverage, MSTR began increasing share issuance to raise funds and continue purchasing Bitcoin. Conversely, when Bitcoin prices rise and leverage ratios fall below 30%, MSTR seizes the opportunity to issue more convertible debt.

However, MSTR's leverage strategy also faces risks such as high leverage, debt maturity, and market volatility. If Bitcoin collapses, MSTR may struggle to raise sufficient funds through the stock market to repay maturing debt and may face a situation where it must issue more shares, leading to dilution of existing shareholders' equity.

Finally, we can see that many publicly listed companies have fully recognized the value storage function and stock price boosting effect of BTC, joining the 'BTC strategic reserve race'.

Conclusion: Is it better to buy BTC or miss out on BTC? That's the question.
Now that Bitcoin has crossed the $100,000 mark, its next step will be to challenge gold's status.

Central banks around the world are one of the core buyers of gold, with a continuous stream of international political black swans and turbulent regional situations driving the demand for gold.

From 2022 to 2023, global central banks net purchased over 1,100 tons of gold for two consecutive years, making them the largest buyers in the international gold market in the past three years and the main drivers of this round of rising gold prices.

In detail, Western countries are net sellers of gold, while emerging nations are net buyers. Emerging central banks like China are increasing their gold holdings and reducing U.S. Treasury bonds to decrease reliance on the dollar system. The trend of de-dollarization is reshaping the global reserve asset landscape.

Compared to gold, Bitcoin has disadvantages in cultural consensus and market capitalization, but it also has unique advantages.

Compared to gold, Bitcoin's supply is more transparent and predictable, never exceeding 21 million coins. After the halving in 2024, the daily addition of Bitcoin will drop to 450 coins, with an annual inflation rate of only 0.8%. In contrast, the annual production of gold remains around 3,500 tons, equivalent to an inflation rate of 2-3%.

Bitcoin's digital characteristics give it a significant advantage in cross-border transfer and storage management, requiring no specialized vaults or complex transportation; a cold wallet can store billions of dollars in assets, which is especially important during geopolitical tensions. Bitcoin does not belong to any country, is not controlled by any single government, is easy to transfer, and has transparent supply, making it an ideal complement to reserve assets.

In the week Trump won, BlackRock's Bitcoin ETF - iShares (IBIT) reached a total asset size of $34.3 billion, surpassing its gold trust fund (IAU), which has a 20-year history.

If Trump truly fulfills his promise to make Bitcoin a strategic reserve for the U.S., the significance of this signal would far exceed the actual quantity purchased. The familiar landscape of the financial system will be rewritten. Just as the dollar was once pegged to gold, the U.S.'s attitude directly determined the fate of the entire Bretton Woods system.
Today, the U.S. attitude towards Bitcoin may similarly trigger a paradigm shift in reserve assets.

We are already seeing some early signs, with El Salvador being the first to adopt Bitcoin as legal tender, albeit on a small scale, setting a precedent; some sovereign wealth funds are also quietly positioning themselves for Bitcoin investments, such as Singapore's sovereign fund Temasek investing in several cryptocurrency-related companies; Bhutan has been actively mining Bitcoin since 2021...

If more countries start to incorporate Bitcoin into their reserve asset allocation, even if only allocating 1-5%, the demand for Bitcoin will experience a qualitative leap. It is worth noting that global foreign exchange reserves exceed $12 trillion.

Institutional investors continuously absorb market liquidity through ETFs, long-term holders are increasing, exchange circulation is continuously declining, and publicly listed companies are hoarding Bitcoin. If we add sovereign reserve demand to this, the scarcity premium of Bitcoin will be pushed to a whole new height.

If that's the case, with only 21 million Bitcoins, they will inevitably become insufficient. Therefore, for retail investors, dollar-cost averaging into BTC may be the best choice.