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% indicates Bitcoin appreciation needs to exceed this rate to cover obligations indefinitely.
MicroStrategy, the largest corporate holder of Bitcoin, has introduced a new market metrics framework designed to provide common equity holders with a clearer view of its holdings after accounting for debt and preferred stock claims. This overhaul comes as the company navigates a bear market and shifts its financing strategy from convertible debt towards "digital credit."
The centerpiece of the new framework is "net Bitcoin per share," which calculates the Bitcoin attributable to common shareholders after subtracting approximately $22.2 billion in senior claims, including $15.5 billion in preferred stock and $6.8 billion in convertible debt, from its $57 billion Bitcoin pile and $3.2 billion in cash reserves. The company stated that "net reserve" is valued at $36.6 billion.
MicroStrategy also redefined its multiple to net asset value (mNAV) formula, permanently setting the equity issuance threshold at 1.0x. This means that if the company's stock trades above its Net Bitcoin Per Share (after accounting for senior claims), issuing new shares will increase the Bitcoin per share for all investors. The company also introduced a "BTC Breakeven ARR" of 3.22%, signifying the annual appreciation rate Bitcoin needs to exceed for the company's Bitcoin gains to perpetually cover its interest and dividend obligations.
These changes follow a late-June pivot where MicroStrategy authorized the sale of up to $1.25 billion in Bitcoin for capital management, a departure from its previous "never sell" stance. The company has recently raised cash by selling MSTR stock, preserving its Bitcoin holdings while diluting common shareholders. The firm's analysis suggests its current structure can remain sustainable if Bitcoin does not fall more than approximately 11% annually through the early 2030s.