Strategy now publishes the Bitcoin return threshold below which it may have to restructure

Strategy has published a financial metric showing that Bitcoin could decline at a constant annual rate of 11.34% across the weighted duration of the company’s credit structure before its modeled coverage falls below 1.0x.

The BTC Floor ARR stood at -11.34% at 3:35 p.m. BST on July 24, when Strategy’s dashboard showed a weighted credit duration of 5.79 years.

The figure models a multiyear return path using Strategy’s current Bitcoin reserve, net debt, preferred stock and annual financing obligations. The metric does not establish a fixed Bitcoin-price trigger, covenant threshold or immediate liquidation event.

Strategy defines BTC Floor ARR as the lowest constant Bitcoin annual rate of return that maintains 1.0x coverage of net debt and preferred stock through its Bitcoin reserve after funding interest and preferred dividends over the modeled period.

“Below the BTC Floor ARR, Strategy may need to consider restructuring its obligations,” the company states in its metric glossary.

The obligations behind the floor

Strategy’s capital-structure data, reported as of July 20, showed $6.754 billion of debt and a $3.225 billion USD reserve. Under the company’s definition of debt principal minus cash, those figures produce approximately $3.529 billion of net debt.

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