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Strategy Revenue Hits All-Time High, How Can Bitcoin Strategy Avoid Liquidation?

Strategy Revenue Hits All-Time High, How Can Bitcoin Strategy Avoid Liquidation?

BlockBeatsBlockBeats2025/08/04 09:04
By:BlockBeats

Strategy's stock price has increased by 166% over the past year, which is twice the increase of Bitcoin (BTC) during the same period.

Original Article Title: How Michael Saylor Will Keep Strategy From Ever Being Liquidated of Its Bitcoin
Original Article Author: Steven Ehrlich, Unchained
Original Article Translation: Saoirse, Foresight News


Strategy (MSTR) Chairman Michael Saylor won widespread acclaim from the investment community on Friday for his company's record-breaking performance in revenue, net income, and earnings per share in the previous quarter (see chart below).


Strategy Revenue Hits All-Time High, How Can Bitcoin Strategy Avoid Liquidation? image 0


In fact, the company's stock price has risen by 166% over the past year, double the increase of Bitcoin (BTC) during the same period.


Strategy Revenue Hits All-Time High, How Can Bitcoin Strategy Avoid Liquidation? image 1

(Trading View)


By any measure, such performance is remarkable. Especially in a landscape where numerous imitators are flocking in, potentially diverting investor funds, this achievement stands out.


Strategy Revenue Hits All-Time High, How Can Bitcoin Strategy Avoid Liquidation? image 2


However, this does not mean that Strategy can rest on its laurels. As a leader in the cryptocurrency asset management space, it holds a certain privilege, and now it seems poised to fully leverage this advantage.


Bitcoin Reserve Continues to Grow, Strategy Faces New Changes


As of the time of writing, Strategy holds 628,791 bitcoins, worth $71.9 billion. The company has accumulated this asset portfolio through various means: issuance of common stock, various types of preferred shares (which can provide dividends or conversion rights in the coming years), and convertible bonds. Details of the various preferred shares are shown below.


Strategy Revenue Hits All-Time High, How Can Bitcoin Strategy Avoid Liquidation? image 3


However, the company now plans a significant shift in its financing approach—specifically, to completely rid itself of debt. Despite its strong balance sheet (with an enterprise value of $126 billion and debt of only $8.2 billion according to the financial report), the company aims to reduce its debt to zero. In an investor conference call following the July 31 financial report release, the company announced plans to redeem the issued convertible bonds and focus on multiple tranches of preferred stock issuance instead.


This means that its $6.3 billion preferred stock issuance size is expected to increase significantly. In fact, during an investor conference call, the company announced plans to refinance an additional $4.2 billion through the latest preferred stock product, Stretch (STRC), with a target monthly yield of 10%.


“This decision reflects Strategy's benign development of capital market financing capability. The convertible bond market is filled with hedge funds and arbitrageurs, who establish long positions on Strategy by buying convertible bonds but at the same time reduce net risk exposure through substantial stock shorting (about 25%). In other words, for every bond they buy, they will sell a large amount of stock, so they are actually only slightly bullish on Strategy,” said TD Cowen Managing Director Lance Vitanza in an interview with Unchained (the full discussion can be viewed on X platform or YouTube). “A few years ago, convertible bonds were the company's best financing channel. But with Strategy's development, they have been able to enter the preferred stock market, where the terms are better, the value-added potential is greater, and the pricing efficiency is higher.”


Strategy Revenue Hits All-Time High, How Can Bitcoin Strategy Avoid Liquidation? image 4


This move once again confirms why Saylor is seen as a “demigod” in the Bitcoin community—he is not only admired for hoarding Bitcoin but also for his responsible operational approach. With few exceptions, he almost never uses leverage financing, instead relying mainly on the equity market.


Although its robust capital structure has been able to avoid forced liquidation (unless Bitcoin's price drops by over 80%), Saylor continues to push the limits.


Often Imitated, Never Duplicated


But don't expect many followers in the Bitcoin, ETH, SOL, BNB, and other fields to emulate this practice. These institutions are just getting started. As I pointed out in other related reports, they are eager to rapidly scale through competition.


This means they will leverage all the tools of the capital markets, including private investment in public equity (PIPEs), credit lines, and of course, debt.


In a previous report, I wrote, “Each method has its pros and cons. Private investment can raise a large amount of funds in a short period, helping to kick-start the reserve strategy, but it may create significant selling pressure. The issuer can also choose to register shares with the SEC before issuance, but the financing cycle is longer. Nowadays, more companies adopt a hybrid model: one-third of the funds come from private investment, the rest raised through convertible bonds or credit tools. Although this approach can delay selling pressure, it may increase leverage on the balance sheet, leading to problems if prices plummet.”


This means that debt is very practical in financing: shareholder dilution may not be apparent until several years later, and in the current bubble market, the coupon rate is almost zero. For example, the Bitcoin fund management company Twenty One raised $485 million in May through the issuance of convertible bonds to kickstart its strategy; in June, Anthony Pompliano raised $235 million for his Bitcoin fund management company ProCap Financial through convertible bond financing.


This is essentially a "buy now, pay later" model.


A Unique Existence


For investors, this means they must always remember: in today's crowded cryptocurrency fund management space, Strategy remains a unicorn-like presence. Currently, it is the only company that can enter the preferred stock market. Its initial preferred stock issuance was in January this year, and the scale of future issuances will be significantly expanded.


For other companies, entering the preferred stock market and eliminating debt is still just a vision. "Most of these companies will start from the convertible bond market, hoping that some of them will grow and eventually qualify to enter the preferred stock market," Vitanza said.


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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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