Strategy’s $59.75B Bitcoin Treasury Underwater as BTC Drops Below Cost

As of February 1st, Strategy’s Bitcoin holdings stood at 713,502 BTC, with a total cost basis of $54.26 billion. This translates to an average purchase price of $76,052 per bitcoin. With Bitcoin’s price dropping to around $60,000, the firm’s entire treasury position is now in unrealized loss territory. This price movement directly caused the company’s operating losses for the quarter to surge to $17.4 billion, a figure attributed entirely to unrealized losses on digital assets. This starkly contrasts with a $1.0 billion operating loss in the fourth quarter of 2024 under a different accounting model, highlighting the volatility impact of the new Bitcoin-centric strategy.

The net loss for the quarter followed suit, ballooning to $12.4 billion from $670.8 million in the same period of 2024. However, the company’s cash position tells a different story, with cash and cash equivalents rising dramatically to $2.3 billion from $38.1 million. This increase was largely driven by the strategic establishment of a $2.25 billion USD Reserve, designed to cover over 2.5 years of preferred stock dividends and interest obligations, providing a buffer against market volatility.

Strategy’s current predicament is the direct result of a radical corporate transformation. Founded in 1989 as a traditional data analytics software company, the firm pivoted decisively in 2020 under the leadership of co-founder Michael Saylor. Seeing Bitcoin as a superior treasury asset to cash during an era of expansive monetary policy, the company began accumulating BTC. By 2025, this shift was complete, culminating in a rebrand to Strategy and a full embrace of its identity as a Bitcoin-first company.

This aggressive strategy has not gone unnoticed by traditional financial institutions. Index provider MSCI has suggested that companies holding more than half their assets in Bitcoin might be considered non-operating, raising questions about Strategy’s classification. Furthermore, the company’s attempts to join the prestigious S&P 500 index in September and December of 2025 both failed, reflecting the ongoing skepticism within mainstream finance regarding corporations dominated by cryptocurrency holdings.

Despite these hurdles, Strategy has argued that it actively uses its Bitcoin treasury to raise capital and drive shareholder value. This claim is supported by its 2025 financial activity, where it raised $25.3 billion to support its BTC treasury and preferred stock offerings, making it the largest US equity issuer for the second consecutive year.

Beneath the headline of quarterly losses, Strategy’s 2025 operational results related to Bitcoin were notably strong. The company achieved a full-year BTC yield of 22.8% and recorded gains of 101,873 BTC. Its commitment to expansion continued unabated into January 2026, with the acquisition of an additional 41,002 BTC, further growing its industry-leading treasury.

The company’s financial ecosystem has also developed around its core Bitcoin holdings. A key component is STRC, a digital credit instrument that has grown to $3.4 billion. Strategy describes STRC as a complementary tool for risk management and capital amplification, with its growth supported by higher liquidity and lower volatility in crypto markets. This instrument, alongside the substantial USD Reserve, forms part of the company’s framework for managing the inherent risks of its Bitcoin-centric balance sheet.

The recent price decline has amplified concerns from critics about the wisdom of large-scale corporate Bitcoin exposure. Prominent investor Michael Burry has characterized Bitcoin as a speculative asset rather than a reliable hedge, warning that further price declines could severely impact major holders like Strategy. Burry’s analysis suggests that being deeply underwater could limit these companies’ access to traditional capital markets, thereby compounding financial stress during a downturn.

For Strategy, the path forward involves navigating this skepticism while proving the long-term viability of its model. The company maintains that its Bitcoin holdings are central to its financial structure and integral to its operations. The coming quarters will be a critical test, demonstrating whether the impressive 2025 yield and capital-raising prowess can offset the volatility and regulatory challenges that have placed its multi-billion dollar treasury underwater and kept it outside major traditional indices.