Credit ratings firm S&P Global has assigned a B- issuer credit rating to Strategy, a company well-known for its pioneering approach to bitcoin treasury management, previously operating under the name MicroStrategy. This new rating is significant as it positions Strategy for potential capital investment opportunities, particularly appealing to credit funds with a high-risk, high-yield focus.
The report released by S&P highlighted several key factors influencing this rating. The firm expressed concerns about Strategy’s narrow business focus, characterized by a heavy reliance on bitcoin as a reserve asset, coupled with low liquidity in U.S. dollars. The agency noted that despite having strong access to capital markets and managing its capital structure prudently, these strengths are only partially offset by the risks associated with a high concentration of bitcoin holdings.
S&P’s perspective highlighted a critical element of Strategy’s operations: its methodology of acquiring and holding bitcoin as a reserve asset. This approach allows investors to gain indirect exposure to bitcoin without the need to hold the cryptocurrency directly. However, S&P emphasized the inherent risks in this model, particularly related to regulatory uncertainties and market volatility, which could create significant challenges for the company’s credit profile.
One of the primary concerns raised was the currency mismatch created by Strategy’s business model. While the company’s obligations, including debt and dividends, are denominated in U.S. dollars, its assets are largely tied up in bitcoin. A sustained drop in bitcoin prices could adversely affect Strategy’s liquidity and capitalization, posing risks to its financial stability.
S&P also assessed Strategy’s risk-adjusted capital (RAC) ratio as “significantly negative,” based on its evaluation of the company’s income-to-capital ratio. As of June 30, 2025, the agency’s analysis indicated that significant market risks associated with bitcoin necessitated a deduction of these holdings from the overall equity value.
In terms of financial performance, S&P revealed that Strategy experienced a cash flow deficit of $37 million in the first half of 2025. During the same period, the vast majority of its reported pre-tax earnings of $8.1 billion stemmed from unrealized gains in its bitcoin treasury. S&P underscored that the company’s assets do not generate cash flows, and this scenario is expected to persist.
Further analysis into Strategy’s capital structure revealed the company carries around $8 billion in convertible debt, with $5 billion currently out of the money and maturing from 2028. S&P cautioned that the firm could encounter liquidity pressures if bitcoin prices decline before these maturities, potentially forcing the company to sell bitcoin at unfavorable prices or engage in debt restructuring.
In acknowledgment of the company’s past performance, S&P noted Strategy’s prudent debt management, with its bitcoin holdings valued at over $73 billion surpassing its debt commitments. The next significant debt maturity isn’t due until 2028, although some notes include a put option in 2027 for holders.
Additionally, the report touched on Strategy’s annual preferred dividends amounting to $640 million. The company plans to finance these dividends through at-the-market equity sales, although delaying payments could result in preferred holders gaining board representation or higher dividend rates, further motivating Strategy to maintain dividend payments.
Moving forward, S&P articulated that the B- rating could face downward revision if bitcoin prices experience a sharp decline or if the company’s access to capital markets deteriorates. Conversely, an upgrade in rating would be contingent upon an improvement in dollar liquidity, diminished reliance on convertible debt, and evidence of sustained access to capital markets during periods of bitcoin price volatility.
