How Low Can Bitcoin Go Before Michael Saylor and Strategy Go Bankrupt? $8000 Was Mentioned But the Number Could Be Different

Michael Saylor’s company, Strategy, has attracted attention in recent years with its aggressive Bitcoin accumulation strategy.

However, company management claims that the company can still be financially viable if Bitcoin prices go down to $8,000. Nevertheless, calculations suggest that the situation could be very different for ordinary shareholders.

Since a drop of more than 40% in the past six months, and its decline below $63,000, Bitcoin’s balance sheet strategy — world’ largest institutional Bitcoin treasury — has been brought back to prominence with its new Balance Sheet of Strategy. There is also debate about how resilient its MSTR common shares are against sharp declines in Bitcoin price, particularly the resilience of their stocks.

At the present time, Strategy’s equity structure consists of $16. has 672 billion in preferred liabilities over common shares. $8 of this, a of the time. Debt and $8 214 billion is debt for . preferred shares is 459 billion, which is a favorite of s. They are priority over common shares in the event of a potential bankruptcy, although preferred stocks do not have an expiry date for their respective shares.

The company also has to pay about $896 million a year in interest and dividends. It is a statement that does not include salaries, legal obligations, operating costs and other expenses.

The assets of Strategy are a 717,722 Bitcoin, $2. The cash figure is 25 billion, and a small software company. A Bitcoin price of $63,270 is about $47, so if the asset value goes to around $48 in a case where it’s just undervalue. A total of 65 billion is a with 65billion. However, in recent years revenue and profitability have been poor performance of the company’s software operations (both revenues and profits) compared to its competitors.

Calculations suggest that, if the Bitcoin price falls below $20,094 total value of the company’s Bitcoin and cash assets will equal its $16. There are 672 billion liabilities, including debt and preferred shares. Alternatively, under this level bondholders and preferred shareholders would have exhausted the company’s entire treasury.

For example, in this case MSTR common shares theoretically do not have any value as far as company assets are concerned. It reduces the shares into a mere option-type expectation value (with Bitcoin rising again in the future) of “the stock is reduced to purely an option” type, which means that it will be possible for bitcoin to rise again.

Strategy management often shares metrics like “Bitcoin per share” or multiples relative to net asset value. The company’s legal documents clearly state that neither ordinary nor preferred shareholders have a direct purchase or ownership right over the company’s treatsury, but no preferred shareholder. Therefore, shareholders’ statements about the Bitcoin reserve to their shareholders are purely theoretical.

Hence, declines in Bitcoin price directly affect not only the balance sheet size but also the hypothetical value upon which MSTR shares are based.

But Michael Saylor claims the company could still operate if Bitcoin price went down to $8,000 as low as it dropped. But calculatings suggest that the level whereby ordinary investors would be out of their economic stake in the company’s treasury is much higher, about $20,000.

*This is not investment advice.

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