Convertible Bonds Pose Hidden Risk to Bitcoin Treasury Firms

According to H100 Group’s Bitcoin lead Brian Brookshire, convertible bonds represent a significant and underappreciated threat to corporate Bitcoin strategies. While these instruments allow companies to raise funds at a premium to spot share prices, they carry substantial hidden dangers that extend far beyond typical market volatility concerns. Brookshire’s analysis highlights that convertible bonds ‘can have quite favorable terms when issued under the right market conditions, but have refinancing risk, are often accompanied by large upfront short-selling, and can take up to 5 years to be discharged.’

The UK-listed The Smarter Web Company exemplifies this trend with its ‘Smarter Convert’ instrument, fully subscribed for $21 million and structured as a Bitcoin-denominated convertible. For companies attempting to replicate MicroStrategy’s treasury playbook, Brookshire’s warning carries particular weight: the very instruments that helped accelerate BTC accumulation can quietly box companies into a corner when markets turn. The fundamental risk lies in the structure of these financial instruments, which create long-term obligations that may become problematic during cryptocurrency downturns.

The scale of the potential problem is substantial. A report by Keyrock from earlier in the year projects a $12.8 billion debt maturity wall for BTC-focused companies, with much of this debt concentrated in convertible notes clustered in 2027-2028. This creates a significant refinancing risk that could force companies to make difficult decisions about their Bitcoin holdings. The mechanism is straightforward but dangerous: if equity prices fall below conversion levels, issuers may be forced to sell their Bitcoin or accept harsh refinancing terms.

Paris-based Sequans has already demonstrated this dynamic in action, becoming the first major treasury to liquidate a portion of its holdings by selling 970 BTC for $93 million. This early warning sign illustrates how convertible bond pressures can translate directly into Bitcoin market selling pressure. Brookshire emphasizes that ‘it is absolutely crucial for BTCTC management to be well versed in the tradeoffs, think with a long-term view about how the usage of any particular instrument will impact the health of the business, and only issue debt or deploy a particular strategy when terms are favorable to the long-term interests of shareholders.’

The potential for a feedback loop is particularly concerning. Forced Bitcoin sales by one company could drive down cryptocurrency prices, potentially triggering conversion threshold breaches at other firms, leading to further selling pressure. This interconnected risk creates systemic vulnerability within the corporate Bitcoin treasury ecosystem that extends beyond individual company balance sheets.

Despite these warnings, corporate Bitcoin accumulation continues apace. MicroStrategy, despite its mNAV multiple slipping from 1.52x to about 1.11x, maintains its aggressive accumulation strategy. Executive Chairman Michael Saylor has told Fox Business that his company is engineered to withstand an 80-90% drawdown in the price of Bitcoin. On November 17, the firm disclosed its biggest purchase since July, worth over $830 million, directly refuting rumors that it had been selling off its stash.

The trend extends globally, with Tokyo-listed Metaplanet increasing its holdings to 30,823 BTC as of November 19, 2025, following a series of acquisitions. In Taiwan, WiseLink’s announcement in August of a three-year convertible note to Nasdaq-listed Top Win International marked the first Bitcoin treasury strategy by a Taiwan-listed firm, again leaning on convertibles to finance BTC exposure. This continued reliance on convertible financing despite the identified risks suggests either confidence in market conditions or potentially dangerous complacency about long-term risks.

The divergence between corporate actions and analyst warnings highlights a fundamental tension in the Bitcoin treasury space. Companies continue to view convertible bonds as efficient tools for Bitcoin accumulation, while risk analysts see them as potential triggers for future crises. As Brookshire’s analysis makes clear, the real test for Bitcoin Treasury Companies may not be their ability to withstand price volatility, but their capacity to navigate the complex refinancing challenges created by their chosen funding instruments in the coming years.