Software firm turned serial cryptocurrency acquirer Strategy (MSTR) isn’t worried about the selloff in digital assets, and says it can survive even if Bitcoin’s (BTC) price falls to $8,000 U.S.
On social media, Strategy’s Executive Chairman Michael Saylor wrote: “Strategy can withstand a drawdown in $BTC price to $8K and still have sufficient assets to fully cover our debt.”
Strategy remains the largest corporate owner of Bitcoin in the world, holding 714,644 BTC that’s currently worth just under $50 billion U.S. The company began accumulating Bitcoin in 2020.
Over the years, Strategy has taken on debt to finance those purchases and now owes $6 billion U.S., equivalent to 86,956 Bitcoin.
While the debt-financed Bitcoin purchases were praised during the crypto bull run of the past few years, they have become a liability as the price of BTC has been cut in half since last fall.
Since mid-October, Bitcoin’s price has plunged from an all-time high of $126,000 U.S. to $69,000 U.S. currently, though the price has been closer to $60,000 U.S. in recent days.
The current situation has thrust a spotlight on Strategy. If the company is forced to liquidate its Bitcoin holdings to pay off debt, it could flood the market and drive prices lower, say analysts.
In his latest social media post, Saylor assured investors that Strategy’s Bitcoin holdings would still be worth $6 billion U.S. even at an $8,000 U.S. price, enough to cover its debt obligations.
Also, Saylor emphasized that Strategy doesn't have to repay all its debt at once, as the due dates are spread out to 2032.
Lastly, Saylor said that Strategy plans to switch its existing convertible debt into equity to avoid issuing additional senior debt.
Convertible debt is a loan that essentially allows lenders to swap debt for Strategy’s shares if the stock price rises high enough.
MSTR stock has declined 60% in the last 12 months to trade at $133.88 U.S. per share.
