Despite Heavy Bitcoin Investment Losses, Strategy Says It Will Repay $6 Billion Debt With Stock

▲ Michael Saylor, Strategy (MSTR) / ChatGPT-generated image

Strategy announced plans to convert $6 billion worth of convertible bonds into equity over the next three to six years to strengthen its financial health.

According to cryptocurrency media outlet Cointelegraph on February 16 (local time), Strategy founder Michael Saylor revealed that the company intends to convert $6 billion in outstanding convertible bonds into shares to reduce liabilities on its balance sheet. The move is seen as a strategic step to ease cash repayment pressure by turning bondholders into shareholders while improving its financial structure. However, concerns have also been raised that issuing new shares could dilute the value of existing shareholders’ stakes.

Strategy currently holds 714,644 BTC, valued at approximately $49 billion. The company emphasized its financial stability, stating that even if Bitcoin were to plunge about 88% from current levels to $8,000, it would still be able to fully cover its debt with its holdings. Converting convertible bonds into equity is interpreted as a preemptive measure to eliminate default risk and lay the groundwork for long-term growth.

Strategy’s average purchase price for Bitcoin is around $76,000, and with Bitcoin currently trading near $68,400, the company is recording an unrealized loss of about 10%. Nevertheless, Saylor recently shared a Bitcoin accumulation chart on X (formerly Twitter), hinting at further purchases and maintaining an aggressive investment stance despite the price decline. Strategy has bought Bitcoin for 12 consecutive weeks, using the market downturn as an opportunity to buy the dip.

Strategy’s stock (MSTR) closed at $133.88 last Friday, up 8.8%, as Bitcoin briefly regained the $70,000 level. However, with Bitcoin falling nearly 50% from its peak, Strategy’s share price has also plunged about 70% from its all-time high of $456 recorded in July. As market volatility intensifies, attention is focused on how Strategy’s large-scale debt-to-equity conversion plan will affect its stock price and investor sentiment.

Saylor’s latest announcement is seen as an effort to ease market concerns over Bitcoin’s price volatility and present the company’s long-term vision. Strategy continues to adhere to its Bitcoin-centric strategy, betting on the asset’s intrinsic value appreciation rather than short-term price gains. The large-scale debt-to-equity conversion is regarded as a strategic decision to lower financial risk while further solidifying its Bitcoin-focused business model.

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