Strategy (formerly MicroStrategy) claims its aggressive Bitcoin buying has generated nearly $2 billion in profits this year, despite the top asset’s apparent price struggles.
A closer look at the enterprise software company’s legally binding regulatory filings, however, tells a much redder story: Under standard accounting rules, the company is facing multi-billion dollar unrealized losses, and its entire Bitcoin stack is firmly underwater.
Despite the paper losses, the company shows no signs of slowing down. Armed with a highly liquid capital markets engine, Strategy continues to issue shares to fund massive daily purchases, completely unfazed by the disconnect between its composite corporate dashboard and the sobering reality of regulation.
A tailor-made winning streak
By its own metrics, Strategy’s Bitcoin treasury playbook is impeccable, despite the prevailing bear market situation in the broader crypto market.
On X, the company said its BTC buying strategy has generated nearly $1.7 billion in Bitcoin profits since January this year.
This benchmark caps a historical accumulation streak that has fundamentally distorted the crypto market’s supply dynamics.
Notably, Strategy announced that it acquired an astonishing 2.2x the amount of newly mined Bitcoin supply over the period. This amounts to more than 94,000 BTC since the beginning of the year.
To quantify this, Strategy management points to two proprietary metrics: ‘BTC Yield’ and ‘BTC Gain’. Strategy reports that a BTC return of 3.7% was achieved this year, generating a BTC profit of 24,675 coins (approximately $1.7 billion).
For retail investors and crypto advocates, these numbers are definitive proof that the company’s accumulation strategy is working.
Strategy’s Bitcoin earnings metric is designed to reward balance sheet expansion per share. In its annual report, the company says that BTC Yield measures the percentage change in Bitcoin Per Share (BPS) from the beginning to the end of a period.
BTC Gain then converts that percentage change into an absolute Bitcoin figure by multiplying the amount of Bitcoin held at the start of the period by BTC Yield. BTC$Gain goes one step further by multiplying BTC Gain by the market price of Bitcoin.
The $14 billion SEC reality
However, the transition from the company’s marketing materials to Securities and Exchange Commission filings and its $1.7 billion in profits are overshadowed by a staggering accounting deficit.
Strategy’s quarter-end filing states the company posted an unrealized loss of $14.46 billion on its digital assets for the three months ended March 31.
Under fair value accounting rules adopted in January 2025, market price movements should flow directly through the income statement. As the price of Bitcoin fell between the end of the year and March 31, Strategy was forced to reduce the official book value of its digital assets from $58.85 billion to $51.65 billion.
In addition to the quarter-end accounting losses, the company’s overall cost base is also underwater. Strategy bought heavily in the first quarter in a weakening market, bringing its total holdings to 766,970 BTC. The total acquisition cost was $58.02 billion, an average of $75,644 per coin.
With Bitcoin currently trading around $71,192, that reserve is worth about $54.60 billion, putting the company roughly $3.41 billion below its total costs.
Strategy buying of Bitcoin continues with STRC
Despite billions in paper losses and an average purchase price higher than the open market value, Strategy insists it will not sell a single coin. Instead, it is doubled.
The ultimate proof of the market’s willingness to finance this belief lies in the STRC issuance of the company’s preferred shares.
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 face value, and Strategy can efficiently leverage its at-the-market (ATM) issuance program to fund aggressive Bitcoin acquisitions.
In fact, STRC.live estimates show that STRC saw its daily volume reach $333 million, the seventh highest trading volume since launch, on April 8. Today’s trading could fund the purchase of more than 2,000 additional Bitcoins.
The numbers are a crucial indicator of the financial health of Strategy’s particular playbook, and indicate that demand for the company’s stock remains abysmal.
As long as Wall Street eagerly absorbs equity offerings at a stable valuation, Strategy faces no immediate pressure to cease operations.
Where the pressure is
The company’s own disclosures show why the dashboard metrics and continued buying streak don’t address the broader balance sheet question.
Strategy acknowledges that its Bitcoin KPIs do not take into account existing and future liabilities, nor the preferential rights of preferred shareholders to dividends and assets in a liquidation scenario.
The annual report adds that purchases financed with non-convertible notes or preferred stock can simultaneously artificially increase BTC Yield, BTC Gain and BTC$Gain, while also increasing the overall debt burden and senior claims on the asset pool.
That qualification has become increasingly important as the capital structure expands. Strategy said in February it had set up a $2.25 billion reserve, which would provide about 2.5 years of dividend and interest coverage.
However, STRC has scaled to a market capitalization of $3.4 billion, and cumulative preferred distributions were $413 million at a blended annual rate of 9.6%.
Crucially, the annual report explicitly states that the software company is not expected to generate sufficient operating cash flow over the next twelve months to meet the company’s financial obligations and liquidity needs, meaning continued funding remains the lifeblood of the model.
This means that a significant decline in the market value of Strategy’s Bitcoin holdings, or a negative shift in investor sentiment and financing conditions, could affect 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. If the company cannot secure financing on time or on acceptable terms, Strategy has admitted that it may be required to sell Bitcoin to meet financial obligations or liquidity needs.
The machine is still running for the time being. The strategy adds Bitcoin, the marketing dashboard still shows positive Bitcoin gains, and STRC remains virtually anchored while providing fresh capital.