MicroStrategy (now Strategy) holds 847,363 Bitcoin bought for $64.1 billion at an average of $75,651. With BTC trading below $60,000, the company has a $14.46 billion unrealized loss under new FASB rules (ASU 2023-08). The losses spread across five groups: common shareholders face dilution as shares trade below Bitcoin holdings; investors in copycat treasury companies suffer even larger discounts; passive and index fund investors risk forced selling if MSCI excludes companies with excessive digital assets; convertible bondholders and preferred shareholders face repayment risk if Bitcoin stays depressed into 2027; and finally, MicroStrategy itself may need to sell Bitcoin to meet obligations. The key test is September 15, 2027, when a $1.01 billion convertible note can be put back for cash. No margin call exists due to unsecured debt, but a calendar date replaces price triggers.

Key facts

• Strategy holds 847,363 BTC at avg $75,651, now below $60K, with $14.46B unrealized loss.
• Common shareholders face dilution as stock trades below Bitcoin holdings value.
• Copycat treasury companies suffer worse discounts than Strategy.
• MSCI may remove firms with >50% digital assets, forcing index fund sales.
• Key risk: $1.01B convertible note put option on September 15, 2027.

KeyAudit data perspective