Michael Saylor stated in a post on X that Strategy’s Bitcoin holdings and USD Reserve currently exceed its debt by approximately $48 billion, in sharp contrast to the tight debt situation at the end of 2022, when the company’s total BTC and cash value was about $300 million below its debt.

The statement was made after Strategy increased its holdings to 846,842 BTC and raised its USD Reserve to $1.1 billion, according to an 8-K filing dated June 15.

The $48B Turnaround

Strategy’s Bitcoin holdings have grown substantially since the period when the company faced debt pressures in late 2022. In its June 15 filing, Strategy stated it holds 846,842 BTC after purchasing an additional 1,587 BTC for $100 million during the preceding week.

At a price of around $64,000 per BTC when Saylor posted, these Bitcoin holdings were valued at nearly $54.2 billion. Combined with the $1.1 billion USD Reserve and compared against the remaining $6.7 billion in convertible bonds, the calculation puts the difference at approximately $48.6 billion.

This picture is a far cry from October 2022, when Strategy held around 130,000 BTC valued at $2.6 billion. Bitcoin subsequently fell below $16,000, causing the total value of BTC and cash to drop about $300 million below debt, according to Saylor.

Strategy has raised more than $60 billion in new capital and acquired over 716,000 BTC since that time, Saylor said. This accumulation has brought current holdings to more than six times the late-2022 level and forms the foundation for his latest claim of “$48B” exceeding debt.

Strategy Cuts Convertible Debt

Strategy completed the redemption of $1.5 billion in 0% convertible senior notes due 2029 in late May. The company spent approximately $1.38 billion in cash on the transaction, representing an 8% discount to face value.

The redemption brought Strategy’s total face value of convertible notes down to $6.7 billion, from $8.2 billion previously. The company stated the transaction was part of its capital structure management plan, while still maintaining its Bitcoin purchasing operations.

During the same period, Strategy issued an additional $2 billion of STRC, a type of variable-rate preferred stock, along with $84 million of common stock. The company stated these funds were used to acquire an additional 24,869 BTC.

Strategy Rebuilds Its USD Reserve

The USD Reserve is the liquidity pool set aside by Strategy to support dividend payments for its preferred stock and interest on outstanding debt. The fund stood at $871 million on May 25 before being raised to $1.1 billion in the most recent update.

During the week ended June 14, Strategy raised approximately $209 million in net proceeds from the sale of more than 1.73 million shares of MSTR stock through its at-the-market (ATM) program. The company used $100 million to purchase more Bitcoin and stated that its USD Reserve had increased to $1.1 billion. This reserve includes expected proceeds from ATM stock sales that have not yet settled.

The focus on liquidity increased after Strategy sold 32 BTC in late May, generating approximately $2.5 million to fund dividend payments for STRC. This was the company’s first BTC sale since 2022 and accounts for only a tiny fraction of its Bitcoin holdings, but it shows Strategy’s willingness to use BTC as a capital management tool when necessary.

The Preferred-Stock Question

The roughly $48 billion figure cited by Saylor compares BTC and the USD Reserve against Strategy’s $6.7 billion in convertible bonds. This comparison excludes the $15.5 billion face value of outstanding preferred stock, according to the company’s May 26 update.

Preferred stock does not have a maturity date like convertible notes and is therefore not classified in the same convertible debt category. However, these securities carry dividend obligations and rank ahead of common stock in Strategy’s capital structure.

The coverage level also fluctuates directly with the price of Bitcoin. With 846,842 BTC, every $1,000 change in the price of Bitcoin will increase or decrease the value of Strategy’s BTC holdings by approximately $847 million.