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Compounding this are the company's obligations — notably, convertible notes and high-yield preferred shares totaling hundreds of millions in annual payments. These financial instruments, often structured to be somewhat flexible, still require service regardless of Bitcoin's value.
Financial Risks and Company Mechanics
Could Strategy Be Forced to Liquidate?
Unlike traditional companies, these treasury firms depend heavily on their Bitcoin holdings' appreciation. If Bitcoin's value drops below certain thresholds, the companies face tough choices: sell Bitcoin at a loss or continue to hold and risk mounting debt obligations.
Strategy's debt structure includes:
Approximately $8.2 billion in convertible notes
About $5.8 billion in preferred shares