Strategy now publishes the Bitcoin return threshold below which it may have to restructure
Strategy’s new BTC Floor ARR metric implies Bitcoin could fall at a constant annual rate of 11.34% over the company’s weighted credit duration of 5.79 years before modeled coverage drops below 1.0x. The figure is based on Strategy’s current Bitcoin holdings, cash, net debt, preferred stock and annual financing obligations, and it is not a covenant, liquidation trigger, or fixed price threshold. As of July 20, Strategy reported about $3.529 billion of net debt and about $15.464 billion of preferred-stock notional, for roughly $18.993 billion of combined claims. It held 843,775 BTC worth about $53.807 billion at a Bitcoin price of $63,769, with annual interest and preferred dividends of about $1.763 billion. Strategy also reported a BTC Hurdle ARR of 10.79%, its estimated cost of credit. The company says that below the Floor ARR it may need to consider restructuring obligations, but the metric excludes several risks and costs.
