Higher Bitcoin prices means MicroStrategy has a stronger balance sheet, a higher share price, and easier debt repayment without the need to sell down its cryptocurrency holdings, said broker Bernstein in a report Tuesday. The report also noted that if Bitcoin crashes and reaches absolute depressed prices and the value of MicroStrategy’s cryptocurrency holdings do not cover debt and certain covenants post June 2025, the corporate structure would come under pressure from ‘spring forward’ clauses.
MicroStrategy holds around 152,000 Bitcoin, with a total cost basis of about $4.5 billion, and an average price of roughly $29,600. The market value of MicroStrategy’s cryptocurrency assets form about 0.78% of the total Bitcoin in supply and account for around 20% of daily average BTC trading volume. The market value of Bitcoin assets form 95% of the market capitalization of MicroStrategy and net of debt raised to buy BTC, equate to about 49% of the market cap of the company.
Investment bank Berenberg said in a report on Monday that MicroStrategy’s ability to refinance its debt maturities would be greatly enhanced if its share price, and the value of its Bitcoin holdings, were to increase meaningfully.
MicroStrategy’s plan to raise long-term debt puts it under pressure to liquidate its Bitcoin (BTC) holdings, but only in case of extreme price corrections, especially around its debt expiry which is due in mid-2025.