Strategy (formerly MicroStrategy) claims its aggressive Bitcoin purchases have generated nearly $2 billion in profits this year, despite the top asset’s apparent price struggle.
But a closer look at the enterprise software company’s legally binding regulatory filings reveals a much more dire story. Under standard accounting rules, the company has billions of dollars in unrealized losses, and its total Bitcoin assets are firmly underwater.
Despite the paper losses, the company shows no signs of slowing down. Armed with a highly liquid capital markets engine, strategies continue to issue stock to fund their large daily purchases, completely unperturbed by the disconnect between curated corporate dashboards and stringent regulatory realities.
Tailor-made winning streak record
According to proprietary metrics, Strategy’s Bitcoin financial strategy is perfect despite the prevailing bear market in the broader crypto market.
on X said its BTC buying strategy has generated nearly $1.7 billion in Bitcoin profits since January of this year.
This indicator will end the historical accumulation that has fundamentally distorted the supply dynamics of the crypto market.
Notably, Strategy revealed that it acquired an astonishing 2.2x the supply of newly mined Bitcoin during this period. This equates to over 94,000 BTC since the beginning of the year.
To quantify this, Strategy management points to two unique metrics: “BTC Yield” and “BTC Gain.” Strategy reports that it achieved a BTC yield of 3.7% this year and generated BTC gains of 24,675 coins (approximately $1.7 billion).
For retail investors and crypto advocates, these numbers are definitive proof that the company’s leveraged accumulation strategy is working.
Strategy’s Bitcoin Profit Index is designed to reward balance sheet expansion per share. The company said in its annual report that BTC yield measures the percentage change in Bitcoin per share (BPS) from the beginning to the end of a period.
BTC Gain then converts that percentage change into the absolute value of Bitcoin by multiplying the amount of Bitcoin held at the beginning of the period by the BTC Yield. BTC $ Gain goes one step further by multiplying BTC Gain by the market price of Bitcoin.
The reality of the $14 billion SEC
But the company’s transition from marketing materials to Securities and Exchange Commission filings and $1.7 billion in profits have been overshadowed by a staggering accounting deficit.
According to Strategy’s quarter-end filing, the company recorded $14.46 billion in unrealized losses on digital assets in the three months ended March 31.
Fair value accounting rules adopted in January 2025 require changes in market prices to be reflected directly in the income statement. As the price of Bitcoin fell from year-end to March 31, Strategy was forced to reduce the digital asset’s official book value from $58.85 billion to $51.65 billion.
In addition to the quarter-end accounting loss, the company’s total cost base is also underwater. The strategy made significant purchases in the market downturn throughout the first quarter, with total holdings reaching 766,970 BTC. The total acquisition cost was $58.02 billion, with an average price of $75,644 per coin.
With Bitcoin currently trading around $71,192, its reserves are worth about $54.6 billion, making the company’s total cost about $3.41 billion less.
Strategy Bitcoin purchases continue at STRC
Despite billions of dollars in paper losses and an average purchase price above the open market price, Strategy insists it will not sell a penny of its coins. In fact, it has doubled.
The final proof of the market funding this belief lies in the company’s STRC preferred stock issuance.
STRC is a high-yield credit structure that pays an annual dividend of 11.5%. The asset is designed to trade close to its $100 par value, allowing Strategy to efficiently leverage its ATM issuance program to fund aggressive Bitcoin acquisitions.
In fact, STRC’s daily trading volume on April 8th reached $333 million, according to estimates by STRC.live, making it the seventh highest trading volume since its founding. Today’s transactions could potentially fund the purchase of over 2,000 additional Bitcoins.
This number is an important indicator of financial health for Strategy’s specific strategy and shows that demand for the company’s stock remains pent-up.
As long as Wall Street is willing to absorb the stock offering at a stable valuation, Strategy will not face pressure to immediately shut down operations.
place of pressure
The company’s own disclosures show why the dashboard metrics and continued buying flow don’t solve larger problems with its balance sheet.
Strategy acknowledges that Bitcoin’s KPIs do not take into account existing and future debt, dividends in a liquidation scenario, or preferred shareholder rights over assets.
The annual report adds that purchases funded by non-convertible notes and preferred stocks can simultaneously artificially raise BTC yields, BTC gains, and BTC dollar gains, while increasing debt and preferred debt across the asset pool.
As the capital structure expands, that qualification becomes increasingly important. In February, Strategy announced that it had set up a $2.25 billion reserve that would provide about two and a half years of dividends and interest.
However, STRC’s market capitalization grew to $3.4 billion, and cumulative preferred distributions paid totaled $413 million at an annualized rate of 9.6%.
Importantly, the annual report clearly states that the software business is not expected to generate sufficient operating cash flow to meet the company’s financial obligations and liquidity needs over the next 12 months, meaning ongoing funding remains the lifeblood of this model.
This means that a significant decline in the market value of Strategy’s Bitcoin holdings or a negative change in investor sentiment or funding conditions could impair the company’s ability to raise sufficient equity or debt financing to meet its obligations.
These risks are most likely to occur when Bitcoin is trading below its book value or cost basis. Strategy acknowledged that if the company is unable to secure financing on time or on acceptable terms, it may need to sell Bitcoin to meet financial obligations or liquidity needs.
For now, the machine is still running. The strategy is adding Bitcoin, the marketing dashboard is still showing positive returns for Bitcoin, and STRC continues to be fixed at near parity while providing new capital.
(Tag translation) Bitcoin