Strategy CEO Says Balance Sheet Safe Unless Bitcoin Falls to $8,000
How Severe Would a Bitcoin Downturn Need to Be?
Strategy executives told investors that the company’s capital structure can withstand sharp declines in bitcoin, setting an unusually low and prolonged price scenario as the point where pressure would emerge. Speaking during the firm’s fourth-quarter financial results webinar, CEO Phong Le said bitcoin would need to fall to $8,000 and remain there for five to six years before the company would face real difficulty servicing its convertible debt.
“In the extreme downside, if we were to have a 90% decline in bitcoin price, and the price was $8,000, that is the point at which our bitcoin reserve equals our net debt, and we will not be able to then pay off our convertibles using our Bitcoin reserve, and we’d either look at restructuring, issuing additional equity, issuing additional debt,” Le said.
The comments came as executives addressed the impact of bitcoin’s recent sell-off on Strategy’s financial results, with markets under pressure across the broader crypto sector.
Investor Takeaway
Why Did Strategy Report a $12.6 Billion Loss?
Strategy reported a net loss of $12.6 billion for the quarter, driven largely by unrealized losses on its bitcoin holdings after prices fell below the company’s average purchase level. The loss reflects mark-to-market accounting rather than cash outflows.
“These results were obviously driven by the quarter-end decline in bitcoins for value under our mark-to-market accounting,” said CFO Andrew Kang. He added that “even in a volatile environment, we continue to execute.”
The earnings call took place during a sharp market pullback. Bitcoin was down about 9% over the prior 24 hours, trading near $64,833, while Strategy shares dropped 17.12% on Thursday to $106.9. The stock is down 72% over the past six months, erasing much of its earlier rally.
What Is Management Saying About Volatility?
Executive Chairman Michael Saylor told investors that short-term price moves, even severe ones, do not alter the company’s long-term framework. “Quarter-to-quarter moves like this can be sharp, can also be unsettling, but it’s important to emphasize that our strategy is built for the long term,” Saylor said.
“It’s built to withstand short-term price volatility, even short-term extreme conditions like we’re seeing today,” he added.
Saylor also pointed investors toward what he described as constructive regulatory developments in the United States, suggesting that external conditions remain supportive despite recent market stress.
Investor Takeaway
How Is Strategy Addressing Quantum Computing Concerns?
During the same call, Saylor addressed concerns that advances in quantum computing could threaten bitcoin’s cryptographic security. He dismissed those fears as overblown, referring to them as part of a “parade of horrible FUD.”
“We think it’s probably 10 or more years away before there’s a threat, that is the consensus,” Saylor said. “It’s a promising technology, but it’s still nascent.”
Saylor argued that quantum risk would not be unique to bitcoin, noting that financial and defense systems rely on similar cryptographic foundations. He said work is already underway across the technology sector on quantum-resistant protocols, and that bitcoin can be upgraded through global consensus.
“Bitcoin is upgradable, and bitcoin can be upgraded to be stronger,” he said. “We are optimists, and we believe that the human race will accept challenges and we’ll upgrade to meet those challenges and do it in a rational fashion.”
What Comes Next for Strategy?
To support coordination around future security upgrades, Saylor said Strategy will launch a Bitcoin Security program intended to work with cyber, crypto, and bitcoin security communities worldwide.
He closed the discussion by stressing the company’s preparedness for extended downturns. “The company is well managed, well collateralized, and responsibly structured so that we can stand difficult months, difficult quarters, even difficult years or two or three-year cycles at a time,” Saylor said. “We’ve done it before. And we’re prepared to do it going forward.”
For now, Strategy’s message to investors is that recent losses reflect accounting mechanics and market cycles, not immediate balance-sheet stress, with management tying long-term outcomes closely to bitcoin’s trajectory over many years rather than months.
