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- As the Bitcoin market experienced turbulence surrounding the probable collapse of Genesis Trading and Digital Currency Group, chat kept coming up that Michael Syalor’s and Microstrategy’s bitcoin bet can be part of jeopardy if the value carries on to decline.
The interrogation and inspection have been done by Will Clemente of Reflexivity Research and Sam Martin of Blockworks Research. In their report, they surveyed the questions that if Microstrategy has a Bitcoin liquidation value, the amount of it, and the way the company’s debt is structured.
The summary of the research
Microstrategy keeps the majority of Bitcoin in the exchange-registered firms, estimating 130,000 Bitcoin. Earlier to this, the firm even took out new loans to develop its Bitcoin holdings. Particularly, Microstrategy took $2.27 as a loan to purchase its Bitcoin at a normal value of almost $30,000 each Bitcoin.
The transformable notes suffer minimal interest costs for MicroStrategy, as per the research report, due to the notes which were published at very commending MSTR conversion prices.
Furthermore, the transformation to stock cannot happen till June 12, 2025, and August 15, 2026, as soon as possible, except if the firm goes through a “fundamental change.” as per the Reflexivity Research, this is the thing with a NASDAQ or NYSE rejection, a merger or obtaining MicroStrategy or a shift in significant ownership of the firm. As Michael Saylor has 67.7% of the voting rights, the later scene is very not likely, creating the transformable notes is not a major risk.
The 2028 senior protected notes, at the same time, are not good for many reasons, as per the report. They add a high fixed interest rate, bind 11.5% of Bitcoin holdings, and could lead to many issues if the maturity date is activated. “Although, it shows no quick hazard to MicroStrategy,” as reported by Blockworks Research.
For Silvergate’s $205 million protected loan in 2025, with almost 85,000 liquid Bitcoin, Saylor’s liquidation value for that loan is achieved at a Bitcoin spot value of $3,561. So, this also doesn’t pose a quick hazard. The Reflexivity Research states:
As the abovementioned risks to MicroStrategy and its Bitcoin reserve are comparably very far from being quick worries, the bigger concern is in the firm’s capability to service the interest on its excellent debt.
MicroStrategy’s functioning results from its software business demonstrate a vital fall in profitability and a potential downturn in profits, and a potential downturn can further influence operating results.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
