Back in 2020, when MicroStrategy first announced it was converting large portions of its cash reserves into Bitcoin, the move was widely seen as radical but clever. Interest rates were near zero, inflation fears were rising, and Bitcoin was emerging from yet another long winter. Saylor argued that holding cash was a guaranteed loss and that Bitcoin represented a superior form of digital property. As Bitcoin surged through 2020 and 2021, MicroStrategy’s stock price exploded. Investors weren’t just buying a software company anymore; they were buying leveraged exposure to Bitcoin wrapped in an equity ticker. The market rewarded that narrative handsomely, pushing the company’s valuation far beyond the simple value of the Bitcoin it held.
This gap between market capitalization and the underlying value of Strategy’s Bitcoin holdings became the foundation of what critics later mocked as an “infinite money glitch.” The logic was straightforward. As long as the stock traded at a premium to net asset value, Strategy could issue new shares, sell them at elevated prices, and use the proceeds to buy even more Bitcoin. Each cycle expanded the company’s Bitcoin stash while reinforcing the story that the strategy was working. On social media, the idea took on a life of its own, celebrated as financial alchemy. But even then, skeptics warned that the entire structure depended on two fragile assumptions: Bitcoin’s price would continue to rise indefinitely, and investors would always be willing to pay a premium for indirect Bitcoin exposure through Strategy’s stock.
The cracks began to show as the market evolved. By 2024, Strategy’s multiple to net asset value, often tracked through metrics like MNAV, had already proven volatile. During the crypto bear market of 2022, the premium briefly collapsed, dipping below one as Bitcoin prices fell and investor enthusiasm cooled. It rebounded during the bull market that followed, nearly reaching four times net asset value in 2024. But this time was different. The second half of 2025 saw Strategy’s share price fall more than 50 percent, even as Bitcoin itself declined only marginally. By early 2026, the company was trading slightly below the value of the Bitcoin it owned, with an MNAV hovering around 0.93.
That shift alone was devastating for the core strategy. Once a company trades at or below net asset value, issuing new shares becomes dilutive in a very real sense. Instead of increasing Bitcoin per share, it does the opposite. Data cited in the video transcript shows this clearly. From 2020 through most of 2024, Strategy’s Bitcoin holdings per share steadily increased. In September 2025, the metric peaked at roughly two bitcoins per 10,000 shares. After that, it began to fall. By the time of the recording, the figure had declined to around 1.91 bitcoins per 10,000 shares, with further erosion likely if the stock remains discounted.
What makes Strategy’s situation especially precarious is not just the shrinking premium, but the mountain of liabilities accumulated along the way. Beyond issuing common equity, the company leaned heavily on convertible bonds and preferred stock to finance its Bitcoin purchases. By 2025, Strategy had issued six tranches of convertible bonds and four classes of preferred stock, collectively totaling nearly $15 billion in liabilities. These instruments were marketed aggressively to investors hungry for yield, particularly in a market starved of high-return fixed-income products.
The preferred shares, with par values of $100 and dividend yields as high as 10 percent, stand out as especially risky. As explained in the transcript, even if the market price of those preferred shares falls, the dividend obligation remains fixed based on par value. Strategy’s STRF and similar issues promise $10 per year on a $100 par share, regardless of how the stock trades. Another class, STRK, offers an 8 percent yield but includes a conversion feature tied to a common-stock strike price of $1,000 per share, a level that looks almost fantastical with Strategy’s stock trading around $173.
In total, the dividend burden from preferred stock alone exceeds $600 million per year. When combined with interest on convertible bonds, Strategy faces roughly $666 million annually in interest and dividend obligations. On top of that, the company’s first major convertible bond maturity looms in 2028, when roughly $1 billion could come due if the stock remains well below conversion prices. If the bonds cannot be converted into equity, Strategy will have to find the cash to repay them.
The uncomfortable truth is that Strategy’s legacy software business is nowhere near large enough to shoulder that burden. In the first nine months of 2025, the software division generated $354 million in revenue but still posted an operating loss of $31 million. In other words, the original business that once justified Strategy’s existence is now a rounding error compared to the financial machinery built around Bitcoin.XX
Michael Saylor’s answer to these concerns has always been the same: Bitcoin will go up. He has repeatedly stated that he expects Bitcoin’s price to increase by roughly 29 percent per year for the next 21 years, a projection that underpins virtually every aspect of Strategy’s capital structure. If Bitcoin rises fast enough, the value of the company’s holdings will grow, its collateral will strengthen, and it will be able to refinance old debt with new debt, rolling obligations forward indefinitely. In theory, the rising tide solves everything.
But markets have a way of testing narratives, and Bitcoin’s performance since late 2024 has not cooperated. After a sharp rally following Donald Trump’s re-election, Bitcoin’s price flattened. It did not collapse, but it also did not deliver the explosive gains required to justify Strategy’s growing leverage. With Bitcoin treading water and Strategy’s stock sinking, the company’s options narrowed quickly.
As laid out in the transcript, Strategy effectively has three ways to cover its ongoing obligations. The first is to sell Bitcoin, which would provide immediate liquidity but undermine the very brand Saylor has spent years cultivating as a Bitcoin maximalist. The second is to issue more common equity, which, at a discount to net asset value, would further dilute shareholders and reduce Bitcoin per share. The third is to borrow more money or issue additional preferred stock, a path that risks pushing leverage beyond what lenders and investors are willing to tolerate, especially given Bitcoin’s notorious volatility. With a debt-to-asset ratio already around 22 percent when preferred stock is included, Strategy is far more levered than many investors might realize.
All of this context makes Saylor’s increasingly combative public appearances easier to understand. On January 16, 2026, he appeared on the pro-Bitcoin YouTube channel “What Bitcoin Did,” hosted by Danny Knowles. What might have been a routine conversation about the growing number of corporate Bitcoin holders quickly devolved into something far more revealing. When Knowles asked about the flood of new Bitcoin treasury companies, many of them unprofitable businesses issuing equity simply to buy Bitcoin, Saylor bristled.
“Well, I guess what I would say is every company can buy Bitcoin,” Saylor said. “Some companies will have more Bitcoin than others. It’s a good idea for all of them to buy it, right?” When pressed on whether cash-flow-negative companies adopting the strategy were fundamentally sound, Saylor shot back, “If a company is not cash flow positive, then it’s just not a good company, right?” Yet moments later, he appeared to contradict himself by suggesting that Bitcoin gains could offset operating losses, arguing that a business losing $10 million a year could still be justified if it held $100 million in Bitcoin appreciating by $30 million annually.
As the conversation continued, Saylor’s tone grew sharper. When Knowles referred to “pure play treasury companies,” Saylor took visible offense. “It’s an offensive question,” he said. “You insult me by characterizing what I am and what I will be for all of eternity.” Despite Knowles’ attempts to clarify and apologize, Saylor doubled down, calling the framing “ignorant,” “insulting,” and “myopic.” At one point, he snapped, “We’re not competing with each other, Danny,” rejecting the idea that hundreds of Bitcoin-holding companies might be chasing the same limited pool of investor capital.
To critics, this defensiveness speaks volumes. Strategy may be the largest and oldest corporate Bitcoin holder, but structurally, it is not fundamentally different from the dozens or hundreds of companies that followed its lead. All of them rely, to varying degrees, on the same mechanism: raising capital to buy Bitcoin and hoping the market rewards that exposure. When smaller, shakier companies are criticized for using Bitcoin as a last-ditch stock-price pump, the implication uncomfortably close to home is that Strategy is simply a larger, more sophisticated version of the same trade.
Saylor attempted to reframe the conversation by arguing that Strategy is not just buying Bitcoin, but creating “digital credit.” Referring to the preferred stock issued in 2025, he positioned the company as an innovator in financial engineering. “We have chosen to create digital credit,” he said, pointing out that thousands of companies issue preferred credit and hundreds of thousands issue corporate debt. To him, the size of the broader credit market implied vast room for Strategy to expand.
But as the video commentary notes, this argument collapses under basic financial scrutiny. The fact that a credit market is large does not mean any single borrower can tap it indefinitely. Credit limits are set by cash flow, collateral quality, and perceived risk. Strategy’s preferred shares pay yields far above those of blue-chip corporate debt precisely because investors view them as risky. As financial analysts have long noted, higher yields are not a badge of honor; they are compensation for danger. The comparison to distressed companies like JetBlue, which issued bonds yielding around 8 percent after being downgraded to junk status, is instructive. High yields signal stress, not strength.
What ultimately emerges from this saga is a portrait of a company caught between ideology and arithmetic. Michael Saylor’s conviction in Bitcoin is absolute, and there is no question that his early bet paid off spectacularly. By buying Bitcoin during a massive bull market and leveraging intense media attention, Strategy achieved something few corporate treasuries ever have: it turned itself into a proxy for a global speculative asset and rode that wave to extraordinary heights. But financial structures built on perpetual optimism have little margin for error.
Critics cited in the transcript argue that the very idea of a Bitcoin treasury company is unnecessary. Investors who want Bitcoin exposure can simply buy Bitcoin directly, avoiding the layers of leverage, dilution, and management risk embedded in a corporate wrapper. Once Strategy’s stock stopped trading at a premium, that argument became harder to dismiss. Without the premium, the “infinite money glitch” is revealed as a temporary market anomaly, not a sustainable business model.
As of early 2026, Strategy remains solvent, massively Bitcoin-rich, and still influential in crypto circles. But it is also burdened with obligations that demand either rising Bitcoin prices or painful strategic compromises. Whether through asset sales, dilution, or refinancing at ever higher costs, something will have to give if conditions do not improve. The anger and defensiveness on display in Saylor’s recent interviews suggest a man acutely aware that the narrative is slipping, even as he clings to it with undiminished fervor.
History is full of financial innovators who were right early and wrong late, who mistook a favorable cycle for a law of nature. Strategy’s future will likely hinge on whether Bitcoin resumes the kind of relentless ascent Saylor predicts, or whether time, volatility, and market saturation force a reckoning. For now, the company stands as both a monument to Bitcoin’s rise and a cautionary tale about leverage, belief, and the limits of financial storytelling.
Comments
Post a Comment