The Scale of MicroStrategy’s Bitcoin Position
As of the latest data, MicroStrategy holds approximately 844,000 Bitcoin. At a price of $65,000 per coin, this stash is worth around $51.1 billion. The company’s total assets, including its legacy software business and cash, sit at about $53.6 billion. After subtracting liabilities—$6.7 billion in convertible notes and $15.5 billion in preferred stock—the net asset value for common shareholders comes to roughly $31.8 billion. Yet MicroStrategy’s market cap was near $41.6 billion as of June 5, showing a premium of about $10 billion over its net asset value.
The Growing Burden of Preferred Stock Dividends
The real issue here is the preferred stock. These instruments require regular dividend payments, usually in cash or additional shares. With preferred stock now totaling $15.5 billion, these dividend obligations have become a significant recurring cost. Fortune’s report suggests that to fund these payments, MicroStrategy might need to issue more preferred shares—diluting common shareholders—or sell some of its Bitcoin holdings. Selling Bitcoin could trigger what analysts call a ‘death spiral.’ This happens when a company sells assets to pay dividends, then needs even more financing, and the cycle worsens. If Bitcoin drops to $50,000, the company’s NAV might fall to about $23 billion. If the market premium on its stock disappears entirely, things could get ugly fast.
Why This Matters to Investors
MicroStrategy, led by CEO Michael Saylor, has effectively become a leveraged Bitcoin investment vehicle. Its stock has historically traded at a premium to NAV, reflecting confidence in Saylor’s strategy nicknamed the ‘Bitcoin Appreciation Flywheel.’ But the recent Bitcoin price correction increases the risk of that premium shrinking. For investors, the big question is whether MicroStrategy can keep accumulating Bitcoin without being forced to sell during a downturn. The preferred stock dividends introduce a new layer of complexity. While the company has weathered Bitcoin’s volatility before, these structural obligations change the game. If selling becomes necessary, it could be a warning sign for other corporate Bitcoin strategies out there.
