Strategy Aims to Convert Convertible Debt into Equity Over 3–6 Years: Implications for BTC

The largest corporate holder of Bitcoin, Strategy, is adopting a long-term approach with its financials to maintain investor confidence following Bitcoin’s recent decline.

Founder Michael Saylor disclosed on Sunday that the company intends to “equitize” its substantial $6 billion convertible debt over the next three to six years, a strategy aimed at eliminating liabilities by converting bondholders into equity holders.

Key Takeaways

• Strategy seeks to transform $6 billion in bond debt into equity shares within a 3–6 year period to improve its balance sheet.
• The firm asserts it can endure a drastic Bitcoin drop to $8,000 while still having enough assets to meet its obligations.
• Converting debt alleviates cash repayment pressures but introduces considerable dilution risks for existing MSTR shareholders.

Strategy and the Mathematics of Debt Survival

This approach is not merely accounting manipulation; it serves as a survival strategy for the aggressive treasury policy launched in 2020.

With Bitcoin currently priced around $68,750 compared to an average acquisition cost of $76,000, the firm finds itself at a loss on its investment.

Nevertheless, Saylor asserts that the company is resilient. In recent communications and interviews, he claims that Strategy can withstand an 88% decline in BTC prices down to $8,000 and still fulfill its debt obligations.

First time I’ve seen Saylor look nervous speaking publicly.
He can’t say anything else, but deep down he knows extreme downside scenarios aren’t impossible.$BTC pic.twitter.com/PS3NDZhYao

— Alejandro₿TC (@Alejandro_XBT) February 11, 2026

This assertion of resilience is vital because, as some analysts observe, Bitcoin behaves like a growth stock, exhibiting high volatility that necessitates a strong balance sheet.

Dilution vs. Default: Strategy’s Double-Edged Sword

By equitizing convertible debt, Strategy avoids the need to repay the principal in cash.

Instead, bondholders receive shares. While this preserves cash flow, it results in dilution for current investors due to an increase in the share count.

At present, 100% of Strategy’s convertible debt is “out-of-the-money,” indicating that the stock price has not reached the conversion threshold. This creates a dilemma: pay cash, refinance, or wait for the stock price to rise.

Saylor remains undeterred. On X (formerly Twitter), the firm stated: “Strategy can withstand a drawdown in BTC price to $8,000 and still have sufficient assets to fully cover our debt.”

Strategy can withstand a drawdown in $BTC price to $8K and still have sufficient assets to fully cover our debt. pic.twitter.com/vrw4z4Ex9q

— Strategy (@Strategy) February 15, 2026

Despite recent market fluctuations, with Bitcoin ETF outflows of $410 million causing prices to dip to the $66k range, Strategy continues to acquire more Bitcoin.

Analysts on MEXC noted that the $8,000 figure represents a theoretical “stress floor.” If BTC were to fall to that level, the company’s Bitcoin holdings would approximately equal its debt obligations.

Meanwhile, institutional interest is on the rise. As the world’s largest asset manager, BlackRock, increases its investments in crypto miners, Strategy is also committed to a long-term strategy in the crypto space.

Saylor hopes that a few years will provide sufficient time for the asset class to mature, enabling Strategy to naturally address the convertible notes through price appreciation.

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Can They Hold the Line?

Saylor recently indicated another purchase, marking 12 consecutive weeks of accumulation.

This conviction is testing the resolve of traders who understand that if Bitcoin falls below $8,000, insolvency becomes a mathematical likelihood, as stated by Strategy CEO Phong Le during a recent earnings call.

For those observing the broader economic landscape, easing inflation is challenging investor confidence across the board. Strategy is wagering that time is on their side.

If they are correct, the dilution of equity will be a minor cost for maintaining solvency. If they are mistaken, the resulting liquidation could be unprecedented.

The post Strategy Plans to Equitize Convertible Debt Over 3–6 Years: What It Means for BTC appeared first on Cryptonews.