Bitcoin Giant Strategy Moves to Retire $1.5 Billion in Convertible Debt, Says It Could Sell BTC

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In brief - Strategy has entered into an agreement to repurchase $1.5 billion of its 2029 convertible senior notes for an estimated $1.38 billion - The move marks the first major step in a multi-year push to "equitize" and pare down the firm's massive $8.2 billion debt stack. - To fund the repurchase of notes due in 2029, the company explicitly listed the "sale of Bitcoin" as an option in its filing. Strategy signaled on Friday that it’s taking major steps to pare down its convertible debt stack, entering into an agreement to repurchase $1.5 billion in notes due in 2029. The Bitcoin-buying firm said in a filing that it expects to pay roughly $1.38 billion to retire debt that the company took on to expand its crypto cache in November 2024, representing a significant chunk of $8.2 billion borrowed by the company in recent years. Co-founder and Executive Chairman Michael Saylor indicated in February that the company would seek over the next three to six years to “equitize” its convertible notes—which investors can trade for common stock if shares clear a certain threshold. As the company controlling $65 billion worth of Bitcoin increasingly leans on its flagship preferred stock, Stretch (STRC), to expand its Bitcoin holdings, the firm’s efforts to retire a portion of its convertible debt align with a broader deleveraging push. While Strategy’s Bitcoin holdings showed billions of dollars in losses earlier this year—with the digital asset dropping as low as $62,850 in February—the looming obligations of its upcoming maturities tested faith in the company’s long-term sustainability. Those questions were compounded by regular dividend payments that Strategy has committed to through STRC. The largest corporate holder of Bitcoin’s shares changed hands around $178 shortly after Friday’s opening bell, according to Yahoo Finance. Year-to-date, the firm’s stock price has advanced 18%, though it still trades well below its high of $457 last year. In the filing, Strategy said that it intends to fund the repurchases using available cash reserves, proceeds from its at-the-market common stock offering program, “and/or proceeds from the sale of Bitcoin.” Traders on Myriad, a prediction market owned by Decrypt parent company DASTAN, currently foresee a 90% chance that Strategy sells Bitcoin before the end of this year. A month ago, traders penciled in just a 12% chance of the company tapping its crypto cache. Despite cultivating a buy-and-never-sell attitude toward Bitcoin for years, Saylor said this month during the company’s first-quarter earnings call, “We'll probably sell some Bitcoin to fund a dividend just to inoculate the market—just to send the message that we did it.” The remark was made in reference to STRC, which currently offers an 11.5% annual dividend paid monthly. Since Strategy began offering the product to investors in July, STRC’s market cap has ballooned to $8.4 billion, amid heightened issuance in recent months. When Strategy repurchases notes due in 2029, the company will have $1.5 billion in convertible debt outstanding from that tranche. What’s more, the firm has issued roughly $1 billion in notes that investors can force the company to buy back as early as September 2027. The company’s efforts to retire debt come as peers plot similar moves. On Thursday, Strive, which manages the ninth-largest Bitcoin treasury, announced that it had eliminated outstanding debt by repurchasing long-term notes at fair value.

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