S&P Global Ratings has given Strategy Inc., formerly known as MicroStrategy, a junk-level credit rating.
The agency assigned Strategy a “B-” issuer credit rating, stating that “the company’s concentration in bitcoin is key to its strategy and will likely continue to weigh on our ratings,” citing its extreme concentration in Bitcoin, limited business diversification, weak capitalization, and low U.S. dollar liquidity.
Bitcoin accumulation model raises liquidity and capital risks
S&P analysts pointed out that Strategy’s corporate identity now revolves almost entirely around its Bitcoin accumulation business.
The company now has 640,808 Bitcoins in its treasury, valued at approximately $74 billion, making it the largest Bitcoin treasury company in the world. It has been able to accumulate these through years of equity and debt issuance. While this has made the firm a proxy for Bitcoin exposure, it has also introduced volatility and liquidity risk into its capital structure.
The report noted that Strategy “has a long Bitcoin position and a short U.S. dollar position.” However, its debt and preferred equity obligations are denominated in U.S. dollars, and this creates an inherent currency mismatch that could prove fatal during crypto market downturns.
S&P’s analysts described this approach as “prudent” in terms of managing near-term maturities, noting that the company has no major debt due within the next 12 months, but warned that the strategy exposes it to the risk of being forced to sell Bitcoin “at depressed prices” during a market stress event.
The firm’s outstanding convertible debt is roughly $8 billion, of which $5 billion remains out of the money, maturing between 2028 and 2031. In addition, the company owes more than $640 million annually in preferred dividends.
Capital markets access remains a lifeline
S&P, however, acknowledged Strategy’s strong access to capital markets as a key strength supporting the stable outlook. The firm’s stock, which has surged in tandem with Bitcoin’s price this year, has a stock market capitalization near $80 billion, “while it has issued almost $15 billion in combined notional value of convertible debt and preferred equity,” according to S&P.
S&P’s base-case assumption is that the company will continue to meet obligations by raising capital through these instruments rather than liquidating its Bitcoin reserves.
The company recorded a negative $37 million in cash flow from operations during the first half of 2025, while the modest software business barely broke even. Nearly all reported earnings, over $8 billion before tax, came from unrealized gains, which also came from Bitcoin’s fair value appreciation rather than recurring revenue or cash-generating operations.
Saylor’s vision meets Wall Street’s reality
In a post on X, Michael Saylor, Strategy’s cofounder and chairman, described S&P Global’s rating of the company as the “first-ever rating of a Bitcoin treasury company.” However, the designation of junk status shows the skepticism with which traditional credit markets still view Bitcoin-backed corporate finance, especially those operating a model similar to Strategy.
The company continues to expand its holdings despite market warnings and increasing doomsday rhetoric from long-term skeptics such as Peter Schiff. This week, it announced a new Bitcoin purchase worth $43.4 million, extending its streak of aggressive accumulation.
On Thursday, October 30, Strategy will be releasing its third-quarter earnings, and as expected, investors will be watching closely for signs of cash flow resilience and balance sheet management.
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