Strategy's Bitcoin Holdings Wipe Out $13 Billion in Value

Strategy's financial woes have deepened as the value of its Bitcoin holdings has fallen by more than $13 billion, causing its funding structure to wobble. The company currently holds 847,363 BTC with an average purchase price of $75,653 per bitcoin, but the current market price is around $60,000.

This puts Strategy in a precarious position, as it can only issue new shares if its market value is at least 22 percent higher than the value of its Bitcoin holdings. Currently, its market value has fallen to 43 percent below the Bitcoin value on its balance sheet, leaving it unable to raise additional funds through share issuance.

Its cash position is also a concern, with preferred shares STRC falling as low as $74.57 and only $1.4 billion in cash and cash equivalents. This leaves about 14 months of dividend capacity, but annual mandatory spending is $1.2 billion, leaving the company struggling to cover its short-term debt.

Some have criticized Strategy's use of debt, with Jack Pan, head of research at Grayscale, arguing that it needs to sell at least $3 billion worth of Bitcoin to cover its short-term debt. Ripple CEO Brad Garlinghouse has also weighed in, stating that the company's debt harms the market.