MicroStrategy admits it might need to sell bitcoin by 2026
In a risk disclosure this week, Michael Saylor’s MicroStrategy (currently doing business as Strategy) admitted that circumstances may mean it has to sell some of its BTC by next year. Any such sale would break years of claims from Saylor that the company plans never to sell.
Indeed, Saylor’s plan for MicroStrategy has been clear and single-minded. “The highest, best use of bitcoin is to buy bitcoin and hold,” Saylor has professed.
Repeatedly and without exception, Saylor has told his followers that he plans to hold onto his coins. “The endgame is to acquire more BTC. Whoever gets the most BTC wins. There is no other endgame.”
Even Saylor, in his personal capacity, says he plans never to sell his BTC and will burn his private keys when he dies. However, there are several events that could force him to sell in spite of his devotion.
According to data from Arkham Intelligence, the company has reportedly moved more than 8,000 BTC worth in excess of $700 million to four newly identified wallets.
Three reasons MicroStrategy could be selling bitcoin next year
In an 8K filing this week, MicroStrategy’s lawyers admitted that there are actually several reasons why the company might sell its BTC.
For context, the company is heavily indebted and owns about $41 billion worth of rapidly fluctuating BTC with less than a 15% profit margin on its investment. Concerningly, BTC is down 19% year-to-date. If its investment deteriorates much further, the company will be forced to deal with its creditors.
Read more: MicroStrategy bought 2.6% of circulating bitcoin at $67,458 apiece
Indeed, MicroStrategy has $8.2 billion in USD-denominated loans and must preserve the USD value of its lenders’ interest and principal payments as they become due. This is the first and most important reason MicroStrategy might have to start selling BTC by 2026.
Specifically, if the company doesn’t have enough cash to make interest payments on its debts, it might have to sell BTC to raise that capital.
Of course, it plans to have plenty of cash and access to capital markets to avoid any sales, but if the price of BTC declines and disadvantages the company from future debt or equity financings, it might have to simply sell to cover its quarterly USD obligations.
Dividend and principal repayment
MicroStrategy also has dividend obligations to two series of preferred shareholders. It has issued 8% dividend-yielding STRK and 10% dividend-yielding STRF. These dividends are perpetual and could also require MicroStrategy to sell BTC to service these obligations.
Finally, MicroStrategy will eventually have to repay its lenders’ principal. Although the company’s various series of debt have unique terms, including equity-based redemption or convertibility provisions, the worst-case scenario for its balance sheet is that every debtholder demands payment of principal in USD at maturity.
From 2028 through 2032, MicroStrategy will need to have enough USD or equity value to repay about $8.2 billion in principal to its creditors.
So, although principal repayments do not technically start in 2026, forward-looking market participants will price the common (MSTR) and preferred (STRK, STRF) stocks with the knowledge that it has these upcoming obligations.
The pricing of MicroStrategy’s equities in 2026, in addition to the company’s creditworthiness, will impact its ability to service USD obligations like interest payments, dividends, and operating expenses like personnel or legal.
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