Strategy (MSTR), the largest corporate holder of bitcoin, has unveiled a revamped approach to measuring its bitcoin holdings, replacing gross figures with net values that factor in the company's preferred stock and convertible debt. This shift aims to provide common shareholders with a clearer picture of the company's actual bitcoin exposure.
The new "Net Reserve" metric stands at $36.6 billion. It reflects Strategy's total $55.6 billion bitcoin reserve of 843,775 BTC combined with $3.2 billion in cash, minus $6.8 billion in out-of-the-money convertible debt and $15.5 billion in preferred stock obligations. These liabilities, totaling $22.3 billion, hold senior claims over common shareholders in case of liquidation.
Updated Valuation Metrics and Market Context
Alongside net reserve adjustments, Strategy has redefined its multiple to net asset value (mNAV) formula. Previously, the mNAV accretion threshold fluctuated above 1.0x, making it unclear if issuing new shares benefited existing investors. Now, the threshold is fixed at 1.0x: if MSTR’s share price trades above this level, share issuance increases bitcoin holdings per share for all shareholders.
The company’s new formula divides MSTR’s price by net bitcoin per share after accounting for debt and preferred stock claims, clarifying whether shares are trading at a premium or discount compared to net bitcoin value.
The bear market, ongoing since October, has pressured Strategy’s stock and related securities. The flagship preferred stock STRC trades near $85, well below its $100 par value since May. Bitcoin itself is hovering around $65,000, 50% below its all-time peak, while MSTR shares have dropped 84% from their November 2024 highs.
The BTC Floor ARR (annual required rate of return) metric shows a breakeven rate of 3.22%. This means bitcoin only needs to appreciate faster than this percentage annually to cover interest and dividend obligations on Strategy’s convertible debt and preferred stock, avoiding restructuring risks.
This metric overhaul follows a trend of Strategy refining its disclosures to adapt to market realities. Investors now get a more transparent lens on how preferred stock and debt affect the company’s bitcoin exposure and equity value.
Bitcoin ETFs experience $225M withdrawal as BTC drops below $65,000 illustrates broader market pressures affecting bitcoin-related assets. Despite challenges, Strategy’s adjustments offer shareholders a more precise understanding of their holdings during volatile periods.
