MicroStrategy (Strategy) has revealed its Q4 2025 earnings report along with a disclosure of a severe risk case that will begin to exert pressure on the company's Bitcoin treasury model.
The CEO's statement provides important information that is hard to find about the level to which the market will decline before the company's capital structure begins to face intense pressure.
MicroStrategy reveals a crucial turning point if the price of Bitcoin drops.
In the latest earnings call, Phong Le, CEO of MicroStrategy, stated that if the price of Bitcoin drops by 90% to around 8,000 USD, it would be the point at which the company's Bitcoin reserves would be worth approximately equal to its net debt.
At such a level, the company may not be able to repay convertible debt using only the BTC held. Therefore, it may ultimately need to consider restructuring, issuing new shares, or borrowing more in the future.
Management emphasized that such a situation is very unlikely to occur and would happen gradually over several years, giving the company time to respond if the market deteriorates significantly.
In an extreme case, if the price of Bitcoin drops by 90% to 8,000 USD, which is quite difficult to imagine, that would be the point where our BTC reserves would equal our net debt. Then we would not be able to use Bitcoin reserves to pay off convertible debt, and we would have to consider restructuring, issuing additional shares, or increasing borrowing. I want to emphasize that this is a timeframe for the next five years. Right now, I am not worried even if the price of Bitcoin drops, Le said.
Meanwhile, it is worth noting that Le's statement this time came just a few months after Strategy's executives had acknowledged a situation that might force the company to sell Bitcoin, as BeInCrypto reported that Phong Le had previously indicated the conditions for selling Bitcoin referencing mNAV and liquidity pressure.
In a discussion via What Bitcoin Did, CEO Phong Le explained the key triggers that may necessitate selling Bitcoin.
First, the company's stock must trade below 1x mNAV, meaning that the market value has fallen below the value of Bitcoin held.
Second, MicroStrategy must not be able to raise new funds either from stock or debt issuance, meaning that the capital market is closed or the costs are too high.
Thus, this latest statement does not contradict Phong Le's previous stance but rather adds another layer of risk.
Previously, selling Bitcoin depended on the stock trading below the mNAV price and the closing of capital markets. However, he clarified that in extreme situations, such as a 90% price drop, the urgent issue would be debt repayment, which is often first addressed by restructuring debt or seeking new funding, not necessarily selling Bitcoin.
Holding a large amount of Bitcoin risks heavy losses.
Strategy remains the public company with the largest Bitcoin holdings in the world, reporting that as of early February 2026, the company holds 713,502 BTC, having accumulated them at a total cost of approximately 54.26 billion USD, as stated in the fourth-quarter earnings.
However, the declining price of Bitcoin in late 2025 had a significant impact on the company's financial position. In that quarter, the company reported losses from unrealized digital asset losses of 17.4 billion USD and a net loss of 12.4 billion USD, reflecting the sensitivity of financial results to market volatility.
Meanwhile, Strategy was still able to raise a significant amount of capital, with the company revealing that it raised 25.3 billion USD in 2025, making it one of the largest equity issuers in the United States.
At the same time, they have built reserves of about 2.25 billion USD to support dividend and interest payments for approximately two and a half years.
The management team expressed that these measures help enhance liquidity and increase flexibility, even when the market faces pressure.
Bitcoin's volatility highlights the risks.
This disclosure comes amid heightened volatility in the crypto market, with Bitcoin trading near 70,000 USD in early February before declining continuously to a daily low of 60,000 USD on February 6. This event illustrates how rapidly changing prices can alter perspectives on high-leverage treasury strategies.
Strategy's capital structure primarily relies on debt, preferred stock, and convertible instruments to accumulate Bitcoin over several consecutive years.
Although this strategy amplifies returns during bull markets, it also amplifies losses during bear markets, which has led to increasing scrutiny from investors and analysts.
However, the company's executives believe that the long-term debt situation allows for time to manage through each cycle and reduces the chances of being forced to sell assets in the short term.
Saylor reiterated a long-term view.
Meanwhile, Michael Saylor, the CEO, reaffirmed confidence in Bitcoin despite recent losses, stating that Bitcoin is the prototype for transforming capital into digital form, while also encouraging investors to HODL.
Saylor and other executives argue that Bitcoin remains the strongest form of money, and the company's long-term strategy is built on holding this asset indefinitely rather than trying to time the market cycles.
The company has also expanded its efforts in financial engineering, including expanding Digital Credit tools and offering preferred shares, with management pointing out that these are designed to reduce volatility and diversify funding sources while continuing to accumulate Bitcoin.
Investors are divided into two camps regarding the risks ahead.
The market's reaction to the earnings disclosure and the bearish situation has been varied. Supporters believe that having a massive Bitcoin reserve, the ability to issue shares, and long-term debt gives the company sufficient flexibility to cope with even severe downturns.
Conversely, critics warn that if a prolonged bear market occurs, it may lead to tougher decision-making, with the risks mentioned by investors, such as diluting existing shareholder equity, pressure on capital structure, or the possibility of having to sell Bitcoin if funding conditions tighten further.
The company is currently facing losses of up to -7.3 billion USD from its investments in Bitcoin, Jacob King said.
At this moment, Strategy seems to firmly adhere to its own highly confident approach. However, when the company stated that its Bitcoin reserves would equal its liabilities, it clearly reflected that even the most aggressive corporate Bitcoin strategy has a theoretical breaking point, which is not only dependent on market prices but also determined by the constraints of leverage itself.
