Michael Saylor made a bold claim during Strategy’s Q4 2025 earnings call: the company can sustain dividend payments indefinitely if Bitcoin grows by as little as 1.25% per year. The statement came at a tense moment, with Strategy Inc reporting a massive accounting loss and its stock sliding sharply in after-hours trading.
Despite the noise, Saylor framed the quarter as proof that the Bitcoin treasury model is doing exactly what it was designed to do — survive volatility, not avoid it.
A Brutal Quarter on Paper
Strategy reported a $12.6 billion net loss for Q4 2025, driven almost entirely by mark-to-market accounting on its Bitcoin holdings. Operating losses reached $17.4 billion, and earnings per share came in at - $42.93, far below analyst expectations. The market reaction was immediate. Shares fell 17.12% in aftermarket trading, closing at $119.74 on February 6, 2026.
The timing didn’t help. Bitcoin dropped to $63,596.56 that same day, a 13% decline in just 24 hours and its worst single-day performance since the June 2022 crash. For the first time since 2023, Strategy’s Bitcoin holdings dipped below their cumulative cost basis.
Yet management repeatedly stressed that none of this reflected operational weakness.
How a 1.25% Bitcoin Gain Covers Dividends
The core of Saylor’s argument is simple arithmetic, not optimism.
Strategy currently holds roughly $45 billion worth of Bitcoin, down from $60 billion the week prior due to price moves. Annual dividend obligations across its preferred equity stack total $888 million.
According to CEO Phong Le, that Bitcoin reserve alone represents around 67 years of dividend coverage if the company chose to fund payouts by gradually selling BTC. Under that framework, Bitcoin only needs to appreciate by roughly 1.5% annually to preserve the reserve while meeting dividend commitments.
Saylor pushed the point even further. Even if Bitcoin never appreciated again, he argued, Strategy would still have “80 years to figure out what to do about that.”
Cash Reserves as a Shock Absorber
To address concerns about short-term volatility, Strategy built a $2.25 billion cash reserve in Q4 2025. CFO Andrew Kang said the reserve provides about 30 months of dividend coverage without touching Bitcoin at all.
The goal, he explained, was confidence. Dividends should not depend on week-to-week Bitcoin price action, especially during sharp drawdowns.
The Business Beneath the Bitcoin
Lost in the headline losses was a solid operational quarter for Strategy’s software segment.
Revenue reached $123 million, beating forecasts by 3.5%. Subscription services revenue climbed 62.1% year over year to $51.8 million, while cloud revenue grew 65%. Total annual revenue for 2025 came in at $477 million, reinforcing that the core business continues to generate cash even as Bitcoin dominates the balance sheet.
Bitcoin Holdings at Historic Scale
As of February 1, 2026, Strategy held 713,502 BTC, acquired for a total cost of $54.26 billion, or an average of $76,052 per coin. That stash represents roughly 3.4% of all Bitcoin that will ever exist, cementing the company’s status as the largest corporate holder globally.
In 2025, Strategy achieved a 22.8% BTC yield, meaning Bitcoin per share grew faster than shareholder dilution. That figure landed within management’s long-term target range of 22% to 26%.
Leverage, but Not the Kind Markets Fear
Investor concern has increasingly focused on Strategy’s debt. Management addressed that head-on.
The company carries $8.2 billion in convertible debt, with net debt of $6 billion after accounting for cash. At current prices, that translates to roughly 13% leverage.
For context, Le compared that figure with broader benchmarks. AAA-rated investment-grade firms average about 23% leverage, BBB-rated high-yield companies sit near 32%, and the tech sector averages around 15.7%. Strategy, by comparison, is operating at roughly half the leverage of investment-grade peers.
The debt itself is unusually flexible. The average interest rate is just 42 basis points, maturities are staggered between 2027 and 2032, and there are no restrictive covenants.
How Bad Would It Have to Get?
Management didn’t dodge worst-case scenarios. According to internal modeling, Bitcoin would need to fall 90%, to around $8,000, before the value of Strategy’s Bitcoin reserve matched its net debt.
Even in that scenario, the company would still have several years before major maturities hit, leaving time to restructure, raise equity, or pursue alternative financing.
Stretch: Strategy’s Digital Credit Engine
A key pillar of the long-term plan is Stretch (STRC), Strategy’s flagship digital credit product. The preferred stock trades near its $100 stated value and pays an 11.25% annualized dividend, equivalent to roughly 18% on a tax-adjusted basis.
Stretch has grown to $3.4 billion in aggregate size, trades about $118 million per day, and shows volatility near 7%, dramatically lower than Bitcoin’s 45%. The instrument is 5.6x over-collateralized after senior claims, and distributions are expected to qualify as return of capital for more than a decade.
The company recently refined its dividend adjustment framework, shifting to a monthly VWAP calculation to reduce volatility around record and payment dates.
Seven-Year Bitcoin Per Share Targets
Looking ahead, Strategy outlined three scenarios for doubling Bitcoin per share over seven years through continued digital credit issuance.
Under a conservative model, a 5% annual BTC yield could drive a 1.4x increase. A mid-case scenario targets a full 2x increase, while an aggressive model aims for 2.5x, assuming higher issuance and lower dividend rates.
Market Reaction vs. Management Conviction
The earnings miss was severe, with a negative surprise exceeding 1,500% versus analyst expectations. Combined with Bitcoin’s price drop below $65,000, selling pressure intensified.
Still, Saylor appeared unfazed. He reminded investors that Bitcoin’s recent 45% drawdown from its all-time high aligns almost perfectly with its historical volatility profile. In his view, the strategy isn’t failing — it’s being stress-tested in real time.
The Bigger Picture
Strategy raised $25.3 billion in capital during 2025, making it the largest equity issuer among U.S. public companies for the second year in a row. In January 2026 alone, despite difficult market conditions, it raised $3.9 billion and acquired 41,002 BTC.
Strip away the accounting optics, and the message from management is consistent: dividends are funded, leverage is controlled, and the Bitcoin treasury strategy remains intact. If Bitcoin grows even modestly over time, Saylor believes Strategy’s dividend engine can keep running — not just for years, but for generations.
#Binance #wendy $BTC $ETH $BNB