Strategy's B- S&P rating will unlock billions — here's why

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The First Bitcoin Treasury Gets Rated: What Strategy’s B- Means for the Sector

Strategy just became the first Bitcoin treasury company to receive an S&P Global credit rating — a B- with stable outlook — marking a historic milestone that validates Bitcoin treasuries as a legitimate asset class and opens billions in institutional capital previously locked out by the absence of third-party credit assessment.

The S&P had already rated MicroStrategy in 2024 before withdrawing at the issuer’s request.

It’s important to note that the B- rating sits in the lower tier of speculative grade territory, technically classified as “non-investment grade” while remaining far from distressed. To receive a B-rating, the agency considers that the company “currently has the capacity to meet its financial commitments, but adverse business, financial, or economic conditions would likely impair capacity or willingness to meet financial commitments.” 

Moreover, B- sits six notches below the investment-grade BBB-, but three notches above the highly speculative CCC ratings that signal substantial credit risk.

Strategy’s B- rating places it alongside companies with elevated leverage and concentrated business risk. Some companies in this cohort are JetBlue Airways — downgraded to B- amid heavy debt loads and volatile earnings — and Hertz Corporation, whose rating reflects high financial leverage and exposure to cyclical demand in car rentals. 

Like these companies, Strategy operates with limited diversification and significant balance-sheet risk. But for Michael Saylor’s firm, the vulnerability stems not from operations, but instead because it holds a single, volatile asset — Bitcoin — as the core of its capital structure, leaving its credit profile highly sensitive to price swings in the cryptocurrency market.

Strategy’s S&P rating changes everything. For the first time, a Bitcoin treasury company has entered the rated credit universe — and we’re tracking the data behind it.

Explore live dashboards and analysis → BitcoinTreasuries.net

Bitcoin treasury risk

The S&P’s methodology reveals how traditional credit analysts still view Bitcoin treasury risk. 

In fact, the agency identified four primary weaknesses: high Bitcoin concentration, narrow business focus, weak risk-adjusted capitalization, and low U.S. dollar liquidity.

Today, Strategy holds 640,808 BTC worth about $68 billion representing virtually all assets, creating what S&P calls an inherent currency mismatch — the company has a long Bitcoin position and short U.S. dollar position. Debt maturities, interest payments, and preferred stock dividends are all due in dollars, while Strategy holds mostly Bitcoin.

The company maintains some dollar balance for operational purposes supporting its small software business, but quickly invests any excess cash into Bitcoin rather than building liquidity cushions. Most critically, the S&P assigns Strategy “negative total adjusted capita” under its risk-adjusted capital (RAC) framework. 

Because the agency deducts Bitcoin assets from equity when calculating adjusted common equity — treating Bitcoin as having “significant market risk that is uncorrelated to traditional market risks” — Strategy’s RAC ratio was significantly negative as of the end of June. 

This mathematical approach reflects the S&P’s view that Bitcoin concentration creates risk profiles incompatible with traditional capital adequacy standards. As long as most assets remain in Bitcoin, the global ratings firm will continue viewing capital as a weakness regardless of unrealized gains.

o21 Solutions

o21 develops and implements Bitcoin-powered corporate strategy, transforming value chains with strategic expertise and tailored advisory services, with a focus on both Treasury and Operations - balance sheet accumulation, mining, and payments. Reduce cycle time through the corporate Bitcoin adoption journey through our pre-packaged or tailored engagements.

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The agency also flagged liquidity risks from convertible debt structure. Strategy has roughly $8 billion in notional convertible debt, with around $5 billion currently out of the money (trading below conversion prices) and notes that mature in early 2028. 

S&P warns of “risk that the convertible debt will become due at the same time as a severe Bitcoin stress, leading to liquidation of the company’s Bitcoin at depressed prices or a restructuring of its convertible debt or preferred equity that we would consider tantamount to default.” 

Strategy’s nearest maturity is 2028 with a noteholder put right in September 2027, creating potential forced selling scenarios if Bitcoin crashes and refinancing markets shutter.

Preferred equity dividends add pressure: as of October, total preferred dividends based on outstanding preferred equity totaled just over $640 million annually, dwarfing the approximately $35 million in convertible debt coupons. 

While Strategy can defer dividends on all four tranches of preferred equity, disincentives exist, two classes (Strife and Strike) entitle preferred holders to board seats if dividends are deferred for four consecutive quarters, with additional seats after eight quarters. The Strife preferred earns compounding interest on deferred dividends at rates higher than the regular rate.

Strategy expects to fund these payments through at-the-market issuances of preferred and common equity rather than selling Bitcoin.

Stable outlook

Yet S&P assigned a stable outlook — not negative — acknowledging offsetting strengths. The agency credited Strategy’s strong access to capital markets and prudent management of its capital structure, including maintaining no maturities in the next 12 months and financing its business primarily with equity.

Strategy has issued almost $15 billion in combined notional value of convertible debt and preferred equity against roughly an $80 billion market cap, demonstrating sustained investor appetite. The company has historically managed convertible debt maturities prudently, according to the S&P, and holds Bitcoin with fair value around $70 billion — multiples of its outstanding convertible debt.

Saylor’s biggest milestone yet. The S&P just gave Strategy a B- credit rating — the first in Bitcoin treasury history. It’s more than validation. It’s a blueprint for the next wave of corporate adoption.

Track the companies following Strategy’s lead → BitcoinTreasuries.net

Meanwhile, the agency does not assume any meaningful regulatory actions that could materially hamper Strategy’s business model in their base case. It’s quite the vote of confidence given ongoing debates about Bitcoin regulation and accounting treatment.

Still, some downgrade triggers are clearly defined: the S&P could lower the rating if Strategy’s access to capital markets is impeded either due to a marked deterioration in the value of Bitcoin or if there is increased risk that the company will not be able to manage maturities of out-of-the-money convertible debt. 

Conversely, upgrades require Strategy to “improve U.S. dollar liquidity,” reduce the company’s convertible debt usage, and continue to demonstrate strong access to capital markets even during distress in the Bitcoin market. These criteria establish benchmarks for the entire sector: liquidity management and capital market access during downturns determine creditworthiness.

The rating’s significance extends far beyond Strategy’s borrowing costs. 

Unlocking billions

Institutional debt investors, which include pension funds, insurance companies, fixed-income mutual funds, operate under mandates requiring S&P or Moody’s ratings before participation.

Strategy’s B- rating unlocks access to this institutional base, potentially worth billions in future debt issuance at scale. While equity investors have flocked to MSTR stock, debt markets remained largely closed to unrated Bitcoin proxies until now.

For the broader Bitcoin treasury sector, Strategy’s rating creates both template and competitive pressure. MARA Holdings with substantial mining operations generating operational cash flow could argue for higher ratings given revenue diversification. Riot Platforms’ similar model might warrant comparable assessment. The precedent exists: now other companies can pursue ratings knowing S&P has established methodology for evaluating Bitcoin concentration risk.

Strategy’s historic S&P rating transforms Bitcoin treasuries from equity speculation into rated fixed-income securities accessible to institutional debt allocators. 

The B- grade reflects real risks — concentration, liquidity mismatches, negative adjusted capital under traditional frameworks — but validates that systematic Bitcoin accumulation with prudent management constitutes manageable speculative-grade credit risk. 

As other treasuries pursue ratings and the market matures, Bitcoin-backed corporate debt could become a permanent fixture in diversified fixed-income portfolios. Saylor’s financial engineering just passed its first institutional stress test, and the entire Bitcoin treasury sector gained legitimacy through traditional finance’s most rigorous analytical framework.

Correction:

Last Friday’s email included language that incorrectly inferred that Strive’s dilluted mNAV and EV-adjusted mNAV were 1.869x diluted and 0.829x “once debt is factored in.”

The company currently holds no debt.

Special thanks to our partners

• o21 Solutions. o21 develops and implements Bitcoin-powered corporate strategy, transforming value chains with strategic expertise and tailored advisory services, with a focus on both Treasury and Operations - balance sheet accumulation, mining, and payments. Reduce cycle time through the corporate Bitcoin adoption journey through our pre-packaged or tailored engagements. Learn more: o21 Solutions

• Cryptio. Cryptio is an enterprise-grade accounting software platform built specifically for digital assets and cryptocurrencies. It enables businesses to transform blockchain transaction data from multiple exchanges and custodians into auditable financial records, supporting compliance with GAAP and IFRS standards. Learn more: Cryptio

• AnchorWatch. AnchorWatch makes Bitcoin ownership safer and easier by combining advanced custody expertise with industry-grade insurance. As a Lloyd’s of London Coverholder, it writers specialized policies that address digital-asset risks, giving clients trusted coverage and peace of mind. Learn more: AnchorWatch

• Stacking Sats Inc. Official IT partner at BitcoinTreasuries, Stacking Sats Inc via its subsidiary, Framework IT, is a managed IT services firm with a 17-year track record of providing bet-in-class IT support, strategy, and cybersecurity, boasting high recurring revenue and long-term client contracts. It’s also one of the top 20 holders of Bitcoin among global private companies. Learn more: Stacking Sats Inc

• Orange Wheel Advisors. Orange Wheel Advisors is a strategic consulting firm that helps companies navigate Bitcoin’s impact on corporate finance and competitive strategy. With expertise spanning treasury management, payments, capital structure, mining, and investor communications, they provide executive education, tailored strategies, and execution support to guide businesses through the global monetary transition. Learn more: Orange Wheel Advisors

• Cadena Bitcoin. A p2p bitcoin lending marketplace with a unique emphasis on working with treasury firms and businesses, as well as the savvy bitcoin-native investors who visit our website. Learn more: Cadena Bitcoin

• Secure Digital Markets (SDM) provides unparalleled liquidity, execution speed, and bespoke customer service, making it the top choice for institutional investors seeking reliable digital asset trading solutions. With deep expertise in capital markets and strict regulatory standards, SDM stands out as the premier platform for all digital asset treasury teams looking to optimize their trading and treasury operations. Learn more: Secure Digital Markets (SDM)

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