S&P Rates Bitcoin Giant Strategy “B-” Amid Debt and Default Risk Concerns

For the first time, one of the major rating agencies has taken a look at a Bitcoin company. S&P rated Strategy (formerly MicroStrategy) “B-,” which suggests default risks. The argument is worth reading.

Strategy (formerly MicroStrategy) now holds 640,808 Bitcoin with a current market value of just over $72 billion, making it by far the largest publicly traded Bitcoin company in the world. This is likely one of the reasons why rating agency S&P took a closer look at Strategy.

The rating agency awarded Strategy a “B-” rating, and S&P explained its concerns in detail in a press release . According to S&P, Strategy’s focus on Bitcoin is a core element of this and will likely continue to influence the rating in the future.

S&P sees significant credit risks at Bitcoin company Strategy

“B-” in S&P’s ratings means “speculative credit quality with increased risk of default.” Analysts emphasize that Strategy is incurring losses in its original software business and may therefore be heading for liquidity problems in US dollars. These risks for the Bitcoin company have been worrying the crypto scene for some time. Strategy has organized various financing rounds for Bitcoin acquisitions and, according to S&P, has taken on massive debt through convertible bonds, raising a good $8 billion.

From 2028 onward, Strategy will have to service its debt, and if the company doesn’t significantly improve its cash flow by then, it will be forced to sell Bitcoin, according to S&P. The rating agency further notes that this risk could coincide with a Bitcoin price slump, which could pose additional problems. Strategy, through founder Michael Saylor, repeatedly asserts that it never intends to sell Bitcoin – but from S&P’s perspective, this tactic is unsustainable in negative scenarios.

Strategy founder Michael Saylor remains convinced of Bitcoin

Saylor is nevertheless pleased that Strategy is the first Bitcoin company to receive a rating from one of the major rating agencies. He knows that such a rating will be a prerequisite for investments from pension funds and other institutions in the future.

Strategy is currently valued at just under $82 billion on the stock market, and the premium on its Bitcoin reserves has shrunk significantly over the past few months. Saylor is likely hoping that S&P will give better ratings in the next round of ratings, which will then open doors for institutional investors.

Conclusion: Bitcoin Risk Strategy – even rating agency S&P has reservations

Strategy plans to present its quarterly results tomorrow, Thursday, but positive cash flow surprises are unlikely.

The company has still not found a way to generate passive income in US dollars from its massive Bitcoin reserves. Strategy and Michael Saylor must therefore prepare for their business concept, which is solely focused on Bitcoin , to continue to be viewed with suspicion and to come under scrutiny in 2028 at the latest, when significant debt must be repaid.

__

(Featured image by Atlantic Ambience via Pexels)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in BLOCK-BUILDERS.DE. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.