- Strategy has made $28B in unrealized profit by buying early and holding without stopping.
- The company raised billions through shares and bonds to buy Bitcoin in large amounts.
- Bitcoin’s rise to $118K helped Strategy grow rapidly, highlighting its risky business model.
Michael Saylor’s firm, Strategy, has surpassed $28 billion in unrealized profit from its Bitcoin holdings, marking one of the largest asset appreciations in corporate history. The company currently holds 597,000 BTC purchased at an average price of $70,982 per coin. As Bitcoin trades around $118,000, the value of its holdings has more than doubled.
Strategy has financed these acquisitions through equity offerings, convertible bonds, and preferred share programs, shifting entirely from its enterprise software roots. The firm reported $14 billion in unrealized returns in Q2 alone, amid Bitcoin’s aggressive market performance.
A Strategic Pivot from Software to Bitcoin Accumulation
Since 2020, Strategy has transitioned into a Bitcoin-focused entity, regularly acquiring volumes of BTC. The firm often made purchases in the thousands and paused weekly acquisitions just once in Q2. This pause allowed a brief market reassessment before resuming its buying program.
To fund its Bitcoin strategy, Strategy launched an at-the-market preferred share sale in Q2 worth $4.2 billion. The proceeds were allocated toward future BTC acquisitions and servicing dividends on outstanding preferred shares. These fundraising efforts are critical to the firm’s ability to maintain and grow its Bitcoin portfolio.
Saylor publicly characterized the BTC holding as a type of Bitcoin yield instrument, having reported a 7.8 percent result with reference to the second quarter. This is based on the company’s conviction of Bitcoin as not only an appreciable asset but also as a long-term store of value that fits within its treasury approach.
Risks Arising from Market Dependency and Concentration
Despite these financial metrics, analysts have laid out the main weaknesses in Strategy’s business model. The reliance of the company on capital markets as a way of funding its Bitcoin purchases might have an effect in turbulent conditions. With just over $112 million in Q2 revenue from its legacy software business, Strategy’s ability to generate internal cash remains limited.
Should equity or credit markets tighten, the firm could be forced to liquidate parts of its Bitcoin portfolio, contradicting its core “HODL” strategy. James Chanos a famous short seller, described Strategy’s model as overleveraged and unsustainable due to its aggressive financial structuring.
This exposure underscores the company’s vulnerability to macroeconomic shifts, interest rate fluctuations, or regulatory changes that could restrict access to capital. Since the business of Strategy is now directly dependent on the success of Bitcoin and the flow of liquidity in the market, any interference with it could trigger material difficulties for the long-term thesis of the company.
Related: U.S. Spot Bitcoin ETFs Hit $50B in Net Inflows, Led by BlackRock’s IBIT
BTC Price Performance Supports Strategy’s Unrealized Windfall
Bitcoin saw an intraday surge, rising 6.3% to a high of $118,856, pushing the market capitalization to $2.34 trillion. Trading volume spiked 103.84% in 24 hours, totaling $124.99 billion. This shows a high level of bullish market and has increased the unrealized gains of Strategy. As the fully diluted value is $2.47 trillion, and due to the preservation of the dominance of Bitcoin, the thesis of this firm is temporarily proven.
Saylor has restated that the HODLing strategy by the firm is central. With the BTC rally still on, the main question now is whether Strategy can continue with its model as Bitcoin experiences headwinds or market limitations in the long run.
