Key facts
- MicroStrategy has implemented a new market metrics framework for its bitcoin holdings.
- The framework now uses net equivalents, factoring in preferred stock and convertible debt.
- The company's "Net Reserve" is currently valued at $36.6 billion.
- The updated mNAV formula permanently sets the equity issuance threshold at 1.0x.
- A BTC Breakeven ARR of 3.22% means bitcoin gains can cover obligations indefinitely if appreciation exceeds this rate.
MicroStrategy, the largest corporate holder of bitcoin, has introduced a new market metrics framework. This overhaul replaces gross bitcoin-based figures with net equivalents, aiming to provide common equity holders with a more transparent overview of the company's financial position. The changes are being implemented as the company navigates a persistent bear market.
The new "Net Reserve" metric stands at $36.6 billion. This figure is calculated by taking MicroStrategy's $55.6 billion in bitcoin reserves (comprising 843,775 BTC) and adding $3.2 billion in cash reserves, then subtracting $6.8 billion in out-of-the-money convertible debt and $15.5 billion in notional preferred stock. These subtractive figures represent senior claims that rank ahead of common shareholders in a liquidation scenario.
The company has also revised its multiple to net asset value (mNAV) formula. The new formula permanently anchors the equity issuance threshold at 1.0x. This means that if MicroStrategy's stock trades above its Net Bitcoin Per Share (after accounting for debt and preferred claims), issuing new shares will add bitcoin per share for all investors.
Additionally, MicroStrategy introduced the BTC Floor Annual Recurring Revenue (ARR) metric. The current BTC Breakeven ARR is 3.22%, indicating that bitcoin only needs to appreciate at a rate faster than this annually for the company to cover all interest and dividend obligations through bitcoin gains alone, in perpetuity. The company has also added new bitcoin market metrics, including the premium to the 200-week moving average and the Fear and Greed Index.