Bitcoin Updates: S&P's B- Highlights Risk of Bitcoin-Dollar Value Discrepancy

S&P Global Ratings has given Strategy Inc. (NASDAQ: MSTR), previously known as MicroStrategy, a B- issuer credit rating,

Inc. (NASDAQ: MSTR), formerly MicroStrategy, according to , pointing to the company’s substantial dependence on , lack of diversification, and mismatches in liquidity. This rating places Strategy in the speculative, non-investment-grade category—commonly referred to as "junk bond" status—and is the first such rating for a company focused on holding Bitcoin as a treasury asset, underscoring the risks tied to its business approach.

The B- rating reflects S&P’s view of Strategy’s concentrated business model, with its balance sheet heavily weighted toward Bitcoin—holding around 640,808 coins worth more than $73 billion as of June 30, 2025, according to

. The company has mainly acquired these assets through issuing equity and debt, including $8 billion in convertible bonds, of which $5 billion are currently "out of the money" and set to mature from 2028 onward, as reported by . S&P cautioned that if Bitcoin’s price drops sharply before these bonds mature, Strategy may be forced to sell Bitcoin at low prices or restructure its debt, putting pressure on its liquidity.

One of S&P’s main worries is the "currency mismatch" between Strategy’s obligations in U.S. dollars—such as $640 million in annual preferred dividends—and its Bitcoin-based assets. The agency pointed out that Strategy’s operating cash flow was negative $37 million for the first half of 2025, and nearly all of its $8.1 billion in pre-tax earnings came from unrealized Bitcoin gains, which do not provide cash, as detailed by

. This setup makes the company susceptible to market swings, as falling Bitcoin prices could reduce its equity cushion and lead to liquidity problems.

S&P also noted that Strategy’s risk-adjusted capital (RAC) ratio is "significantly negative," since Bitcoin holdings are subtracted from equity due to their market risk. Even though Strategy’s Bitcoin reserves are larger than its debt, the agency stressed that the company’s capital structure is fragile without steady cash flow. Strategy intends to cover preferred dividends through at-the-market equity sales, but delaying these payments could prompt preferred shareholders to seek board seats or higher rates, complicating capital management, as observed by

.

Despite these challenges, S&P gave a stable outlook, assuming Strategy will handle its convertible debt responsibly and continue paying dividends. The agency stated that an upgrade would require stronger dollar liquidity, less dependence on convertible debt, and evidence of access to capital markets even during Bitcoin downturns. On the other hand, a downgrade could occur if Bitcoin prices collapse or if access to capital markets deteriorates.

Strategy’s B- rating serves as a reference point for traditional finance to assess companies centered around Bitcoin. The firm, which changed its name from MicroStrategy in 2025, has led the way in corporate Bitcoin adoption, acquiring assets to enhance shareholder returns. However, its bold approach has attracted scrutiny as credit rating agencies work to evaluate businesses with unconventional balance sheets. S&P’s review highlights the difficulties of matching volatile crypto assets with stable, dollar-based liabilities—a challenge that is likely to influence how regulators and investors view Bitcoin treasury strategies.