The company's fourth-quarter earnings report emphasized maintaining financial soundness even in extreme downturn scenarios.
"If BTC crashes 80%, Bitcoin holdings and net debt will be the same... Only then will we consider restructuring."
);)
"Bitcoin would have to fall to $8,000 and stay there for five to six years to pose a real threat to the company's ability to repay its convertible bonds," CEO Le said during a Strategy's Q4 earnings webinar last year.
A 90% BTC Crash Wouldn't Be an Immediate Crisis
CEO Lee explained the company's financial stability by assuming an extreme downturn scenario.
He explained, "If the price of Bitcoin crashes by 90% and reaches $8,000 in an extreme downward situation, then the value of our Bitcoin assets will be equal to our net debt. At that point, we will no longer be able to repay the convertible bonds with our Bitcoin holdings, and we will have to consider restructuring, capital increase, or issuing additional debt."
Assuming a decline of more than 90% compared to the current BTC price.
Bitcoin is currently trading at around $70,000. The $8,000 target mentioned by CEO Le represents a decline of approximately 90% from the current price.
Strategy is one of the companies that has benchmarked the Bitcoin buying strategy led by MicroStrategy founder Michael Saylor, and is using a strategy of increasing corporate value through large Bitcoin holdings.
Convertible bond structure acts as a buffer
Strategy's financing structure primarily relies on convertible bonds. Convertible bonds offer the option to convert into equity rather than cash upon maturity, reducing the pressure to immediately repay cash even when the Bitcoin price declines.
CEO Le's remarks came amid growing concerns about the financial health of companies holding Bitcoin due to the recent volatility in the virtual asset market. He presented an extreme scenario, revealing his intention to allay investor anxiety.
Joohoon Choi joohoon@blockstreet.co.kr
