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Strategy publishes a Bitcoin return floor tied to debt coverage

The metric implies BTC can fall at an 11.3% annual rate, assuming Strategy’s weighted credit duration of 5.79 years, before modeled coverage drops below 1.0x.

Reported · Written up by our desk · Market Structure

Strategy has published a new internal metric that sets a “BTC Floor ARR,” the lowest constant annual Bitcoin return required to keep modeled coverage of its net debt and preferred stock at 1.0x over its Bitcoin reserve, according to CryptoSlate.

The BTC Floor ARR was shown at minus 11.34% at 3:35 p.m. BST on July 24, based on Strategy’s dashboard inputs including a weighted credit duration of 5.79 years. CryptoSlate reports the framework models a multiyear return path using Strategy’s current Bitcoin reserve, net debt, preferred stock and annual financing obligations, and notes it does not specify a fixed Bitcoin-price trigger, covenant threshold, or immediate liquidation event.

In its definitions, Strategy says that below the BTC Floor ARR it may need to consider restructuring its obligations. CryptoSlate adds that, as of July 20, Strategy reported $6.754 billion of debt and a $3.225 billion USD reserve, implying about $3.529 billion of net debt, alongside $15.464 billion of preferred-stock notional.

CryptoSlate also reports Strategy held 843,775 BTC worth about $53.807 billion at a captured Bitcoin price of $63,769, with annualized interest and preferred dividend obligations of roughly $1.763 billion. The company says the threshold can move as Bitcoin’s market price, the USD reserve, and its debt and preferred obligations change when it publishes updated financing data.

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