Strategy: Bitcoin Would Have to Fall 83% for STRC to Hit 1x BTC Rating

Why Strategy Published the Bitcoin Floor Chart

Strategy Inc. (Nasdaq: MSTR) used the Sept. 1 chart to address a central risk created by its capital structure: how far bitcoin could decline before the reserve’s modeled value matched the obligations counted for each security. The company stated:

“$BTC would have to fall 83% from current levels before $STRC reaches a 1x $BTC Rating.”

A 1x $BTC Rating means that, under Strategy’s internal calculation, the value of its bitcoin reserve equals the notional debt and preferred-stock claims included for that instrument. A rating above 1x indicates that the modeled bitcoin value exceeds those claims. It does not mean STRC would default, stop paying dividends, or trade at a particular price once bitcoin reached $13,136.

Each security has a different threshold as the calculation includes a different amount of the company’s capital structure. The chart listed $1,519 for STRF, $13,136 for STRC, $14,198 for STRE, $15,857 for STRK, and $17,517 for STRD. Debt reached 1x at zero under the displayed model.

The gap between bitcoin’s price and STRC’s $13,136 threshold supports Strategy’s argument that its bitcoin reserve provides substantial modeled asset coverage. However, the calculation does not measure the cash available for dividends, the securities’ market values, or potential recovery during a restructuring. Strategy’s credit metrics also note that $BTC Rating is illustrative, excludes potential cross-defaults, and is not an external credit rating.