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Strategy Wiped $1.5B of Debt and Didn’t Sell <a href="https://jpyeur.com/btc-usd/">Bitcoin</a> to Do It

Key Takeaways:

  • Retired $1.5B in 2029 convertible notes for $1.38B in cash.
  • Debt buyback funded through cash, MSTR equity and STRC preferred stock.
  • Bought additional 24,869 BTC during the same period.
  • Total holdings now 843,738 BTC, convertible debt down to $6.7B.
  • Bondholders need MSTR at $672.40 by 2029, it trades at $159.

When Strategy announced to the Securities and Exchange Commission that it would buy back $1.5 billion of its convertible notes, most people in the crypto and finance worlds immediately assumed the company would need to sell some of its Bitcoin holdings to raise the necessary $1.38 billion. However, the actual results showed a different outcome.

A recent report from May 11-25, 2026, confirmed the company funded its debt repurchase using existing cash and by selling shares of its common and preferred stock. Importantly, no Bitcoin was sold to fund this repurchase. During the same period, the company used the money raised from those stock sales to purchase an additional 24,869 Bitcoin.

The company known for buying Bitcoin instead chose to sell shares to improve its financial situation, rather than selling its Bitcoin holdings.

What the transaction actually involved

In November 2024, the company issued $3 billion in convertible notes. Recently, they bought back half of those notes – $1.5 billion – effectively cancelling that portion. The remaining $1.5 billion in notes remain outstanding with the original terms.

Strategy spent about $1.38 billion to reduce its debt by $1.5 billion, saving approximately $120 million – or 8 cents for every dollar of debt. This repurchase also allowed Strategy to earn 0.7% in Bitcoin yield, gain 4,391 Bitcoin, and increase its Bitcoin holdings by $333 million in value. Ultimately, paying off the debt resulted in Strategy increasing its overall Bitcoin assets.

Our total convertible debt decreased from $8.2 billion to $6.7 billion. As of May 25th, our USD Reserve is $871 million. So far this year, Strategy has earned a 13.3% return on its Bitcoin holdings, gained 89,378 Bitcoin, and increased its Bitcoin value by $6.8 billion.

Strategy has bought back $1.5 billion of its 2029 Convertible Notes for approximately 8% less than their original value. This move is expected to increase their Bitcoin yield by 0.7% and reduces their total debt to $6.7 billion.

— Strategy (@Strategy)

The capital structure Strategy used

As an analyst, I’ve been looking into how Strategy funded its $1.38 billion debt repurchase, and it’s quite interesting. They managed to do it without selling any of their Bitcoin holdings by employing a three-pronged approach – essentially, they pulled three financial levers at the same time.

As a researcher, I’ve found that Strategy had built up cash reserves starting in December 2025, and they intentionally kept those funds available to cover their debts and pay dividends to preferred stockholders. Essentially, it was a dedicated fund for those specific financial obligations.

The company also used an at-the-market equity program to sell shares of its common stock (MSTR). Instead of issuing a large block of shares all at once, this program lets them sell shares slowly over time on the open market. During this period, they sold $84 million worth of MSTR stock using this method.

Strategy also issued $2.0 billion worth of Variable Rate Series A Perpetual Stretch Preferred Stock. The money raised from this stock sale was used to buy back debt and to purchase an additional 24,869 Bitcoin.

The net result: less debt, more Bitcoin, no Bitcoin sold for the buyback.

Michael Saylor explained that the company’s financial structure allows for flexibility. He stated they can fund important projects using either cash or various digital assets, giving them options to manage their finances and react to changes in the market. Their main goals remain increasing the value of Bitcoin held per share for regular shareholders and keeping a strong financial position for those who have invested in their digital credit offerings.

Strategy CEO Phong Le recently stated that the company used a variety of financial tools, including selling some of its Bitcoin holdings, to manage its capital. While the recent $1.5 billion debt repurchase wasn’t directly funded by Bitcoin sales, the company isn’t ruling out using it as a financial resource. Le explained that they paid $1.38 billion in cash to retire the debt and have earned a 13.3% yield on their Bitcoin so far this year, demonstrating their careful approach to managing finances.

Why the bondholders sold back at a discount

These convertible notes don’t pay any interest. Investors were hoping the value of the notes would increase if MSTR’s stock price went up, allowing them to exchange the notes for shares of the company.

MicroStrategy shares are currently trading around $159, while the price to convert the company’s bonds is $672.40 per share. Despite criticism from Peter Schiff, who has called it a Ponzi scheme, the bonds would need to increase in value by roughly 267% by December 2029 for the conversion option to be worthwhile. This calculation is what led bondholders to accept a loss of 8 cents on the dollar now, rather than risk waiting and potentially losing more.

The investors most familiar with these bonds noticed the large difference – 267% – between the current price and what they’d need to be worth to convert. They figured accepting an 8% loss now was better than waiting another three years for a potential price increase that wasn’t guaranteed.

CFO Andrew Kang explained that buying back the 2029 convertible notes is good news for all investors, strengthening both the company’s equity and credit position. He emphasized the company’s commitment to keeping a strong cash reserve to ensure the quality of its Digital Credit investments. The company intends to rebuild this reserve by selling a combination of Digital Capital, Digital Credit, and Digital Equity, adjusting the mix based on market conditions.

843,738 BTC and a cleaner balance sheet

As of May 25, 2026, Strategy owns 843,738 Bitcoin, which translates to approximately 220,900 Bitcoin for each share, calculated in satoshis. The company currently has $6.7 billion in convertible notes and $15.5 billion in preferred stock outstanding.

As a crypto investor, I’m paying close attention to the company’s preferred stock. Even though they’ve reduced their convertible debt, the ongoing dividend payments for the preferred stock are a real obligation, and the $871 million USD reserve is specifically there to cover those payments. Management has indicated they plan to rebuild that reserve by selling more equity and preferred stock when the market allows, which is something I’ll be watching closely.

The most telling detail is that Strategy bought $24,869 worth of Bitcoin at the same time it paid off debt. Companies truly struggling financially wouldn’t increase their Bitcoin holdings while also reducing debt. Strategy did both within a two-week period, funding the purchases with money raised from the stock market instead of selling Bitcoin.

Investors who sold their bonds at a lower price than their original value believed MicroStrategy’s stock wouldn’t hit $672.40 by 2029. Meanwhile, MicroStrategy itself predicted it could pay off its debts, purchase more Bitcoin, and maintain its financial reserves. The latest results show MicroStrategy successfully exceeded expectations in all key areas.

This article is for informational purposes only and shouldn’t be considered financial, investment, or trading advice. Coindoo.com doesn’t support or suggest any particular investment or cryptocurrency. Always do your own research and talk to a qualified financial advisor before investing.

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2026-05-26 16:09