Strategy (MSTR) plans to swap $6B convertible debt for equity

Michael Saylor said on Sunday that Strategy (previously known as Microstrategy) plans to convert roughly $6 billion of its convertible debt into equity over the next three to six years, aiming to lower leverage while keeping flexibility around its Bitcoin strategy.

The company said it can withstand a drawdown in Bitcoin’s price to $8,000 and still have sufficient assets to fully cover its debt, pointing to $49 billion in BTC reserves and 714,644 BTC on its balance sheet.

Debt swap plan and balance sheet posture

The company posted on X saying the firm’s convertible debt is around $6 billion, and the reserve position implies Bitcoin would need to fall about 88% for the two to be equal.

Saylor added that the company intends to convert its convertible notes to equity over three to six years.

Equitizing convertible debt turns bondholders into shareholders, which reduces debt pressure but can dilute existing investors.

Strategy also said it will avoid issuing additional senior debt through convertible senior notes.

The firm has accumulated over $8.2 billion in debt, primarily via convertible notes, and noted there are no major maturities until 2028, according to the company’s statements summarized by Benzinga.

Saylor said last week the company has 2.5 years of cash to cover dividends and debt without raising money.

Asked how Strategy would respond if Bitcoin dropped 90% and stayed there for four years, he replied, “We’ll refinance the debt.”

Bitcoin exposure and ongoing accumulation

Strategy’s average Bitcoin purchase price is around $76,000, meaning it is currently down about 10% with BTC near $68,400, according to the firm and CoinGecko data cited in market reports.

Saylor signaled another purchase by posting the company’s accumulation chart on X on Sunday.

A new buy would mark 12 consecutive weeks of additions despite recent declines in both the asset and the stock.

Stock performance and market context

Strategy shares (NASDAQ: MSTR) rose 8.8% on Friday to close at $133.88, according to Google Finance.

Bitcoin briefly reclaimed $70,000 late Friday before slipping to $68,400 on Monday, CoinGecko figures showed.

Despite the bounce, Strategy’s stock is down 70% from its mid-July all-time high of $456.

Over the same period, Bitcoin prices have fallen 50% from their early October peak, tying the equity’s drawdown to the broader market retracement.

Skepticism and the downside case

Strategy framed its balance sheet as resilient, saying reserves of $49 billion versus $6 billion of net debt would still match liabilities if Bitcoin fell to $8,000.

The company described net debt as total outside debt minus cash reserves.

Critics pushed back on the narrative. Economist Peter Schiff questioned whether markets would take Saylor or Bitcoin seriously at $8,000.

Benzinga’s analysis noted that at $8,000, Strategy’s 714,644 BTC would be worth about $5.7 billion against an average acquisition cost of roughly $54.35 billion, implying an unrealized loss of $48.6 billion in that scenario.

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