Michael Saylor’s Bitcoin holdings may face liquidation
Michael Saylor’s company, Strategy, disclosed in a recent regulatory filing that it might need to sell portions of its vast Bitcoin (CRYPTO:BTC) holdings to address financial obligations.
The filing, dated April 7, revealed that without securing new financing, the company could be forced to liquidate its Bitcoin assets to cover debts.
Strategy anticipates reporting an unrealised loss of nearly $6 billion for Q1 2025, despite a $1.7 billion tax benefit.
The company holds over 528,000 BTC, purchased at an average price of $67,450 per coin, amounting to a total investment exceeding $35 billion.
However, mounting financial pressures are evident, with $8 billion in debt and annual obligations including $35 million in interest payments and $150 million in dividends.
The company’s software business reportedly generates insufficient revenue to meet these costs, raising concerns about its reliance on Bitcoin’s performance.
The price of the cryptocurrency just fell to $76,100, and if it keeps falling, Strategy's capacity to control its debt may be in danger.
To address its financial challenges, Strategy announced plans on March 10 to raise $2.1 billion by selling perpetual preferred stock with an 8% dividend.
This move aims to secure funds without incurring additional traditional debt.
Interestingly, the proceeds would not only support operational needs but also facilitate further Bitcoin purchases.
The filing also included a standard risk disclosure stating that continued Bitcoin price drops might necessitate asset sales to repay debts.
Analysts have noted that such warnings have appeared in prior filings and may not indicate an immediate crisis.
Meanwhile, Bitcoin’s volatility remains a critical factor for Strategy’s future.
At the time of reporting, the Bitcoin (BTC) price was $81,711.96.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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