Strategy’s debt instruments maintain 1.0x BTC rating even at $21K Bitcoin price

Strategy Inc. just showed its math on what happens if Bitcoin craters, and the answer is: not much. The company’s BTC Floor metric confirms that every single one of its debt and preferred stock instruments holds a coverage rating above 1.0x even if Bitcoin plummets to $21,000, a level roughly 80% below current prices. The numbers behind the floor Strategy’s BTC Floor Annualized Return, a metric the company uses to gauge the minimum performance its Bitcoin reserves need to deliver, currently sits at -11.34%. That figure represents the worst annualized return Bitcoin could deliver before the company’s obligations start looking shaky. Put differently: Bitcoin would need to decline at roughly 11% per year, compounded over the weighted credit duration of about 5.79 years, before Strategy’s coverage ratios dip below the critical 1.0x threshold. The company’s internal modeling goes further than the $21K scenario. Financial projections suggest the over-collateralization framework could withstand Bitcoin prices as low as $7,000 to $8,000 per coin before the math truly breaks. On the liability side, Strategy carries approximately $6.7 billion in outstanding convertible notes following a $1.5...