Accessing the MSTR Bitcoin proxy via Robinhood

Robinhood removed temporary trading restrictions on all stocks, such as those favored by retail investors, according to its website. This decision allows traders to access MicroStrategy (MSTR) shares, which many investors use as a Bitcoin proxy. MicroStrategy operates as a Bitcoin development company and uses cash flows and proceeds from debt and equity financings to accumulate the cryptocurrency. The company holds an aggregate of 252,220 bitcoins, which it acquired at an aggregate purchase price of $9.90 billion. MSTR shares gained 112% since the beginning of the year, while Bitcoin prices returned only 42% during the same period. You already know the premium on MSTR remains a central point for investors. During the period between September 13, 2024, and September 19, 2024, the firm acquired 7,420 bitcoins for approximately $458.2 million in cash. This acquisition occurred at an average price of $61,750 per bitcoin, inclusive of fees and expenses. The company also recently purchased $43 million in Bitcoin to expand its treasury.

The financial structure and STRC

MicroStrategy expands its Bitcoin holdings through complex financial instruments such as convertible senior notes and perpetual preferred shares. The company issues convertible notes that function as hybrid securities, giving bondholders downside protection and the option to convert debt into common stock if the share price exceeds a specific threshold set at the time of issuance. Because investors seek equity upside, MicroStrategy often issues these notes with interest rates between 0.0% and 1.0%. The firm also issued STRK, a series A perpetual strike preferred stock, which can conditionally convert into MSTR shares. This new supply of STRK competes with MSTR demand, although management intends the strategy to be accretive for shareholders.

MicroStrategy recently completed an offering of $1.01 billion through convertible senior notes due 2028. This capital allowed the firm to redeem $500 million of its outstanding senior secured notes due 2028 and acquire additional bitcoins. The company also announced a redemption notice for $1.05 billion in 0.0% convertible senior notes due 2027. Holders of those notes may convert their debt into 7.0234 shares of class A common stock per $1,000 principal amount at a conversion price of $142.38. This redemption process requires holders to comply with the indenture through the facilities of DTC. The company also plans to repurchase nearly $1.5 billion of its outstanding 0% convertible senior notes due 2029, a move with an estimated cash cost of $1.38 billion. This repurchase may use proceeds from $206.61 million in recent STRC stock issuances.

The risks of the treasury model

The leveraged Bitcoin treasury model faces pressure if Bitcoin prices drop or if the company’s premium compresses. MicroStrategy carries $8.17 billion in long-term debt and faces annual preferred dividend obligations of $750 million to $800 million, having paid $229.53 million in Q1 2026 alone. To fund these preferred dividends, the company sold 3,588 bitcoin, worth roughly $225 million, in July. This sale caused Reddit sentiment to collapse from a very bullish 94 to a bearish range of 18 to 28 in just weeks. The company reported a Q1 2026 EPS of -$38.25, driven by a $14.46 billion unrealized loss on digital assets. The firm raised $11.68 billion in fresh equity this year, which dilutes common holders. This dilution happens because the company uses new equity to buy more Bitcoin. One year ago, MicroStrategy held a market cap of $8.8 billion, but it grew by 1,000% even though the share price grew by only 600%. This gap between market capitalization and share price reflects the increased supply of MSTR shares. The company also faces $1.76 billion in annual cash obligations, such as interest and dividends. Unlike BlackRock or Fidelity spot Bitcoin ETFs, MicroStrategy must manage these heavy dividend loads. If the company faces a liquidity crunch, the board can vote to suspend preferred dividend payments. This move preserves capital but prevents the company from paying common shareholders or executing buybacks until it clears the arrears. The model fails if the premium turns into a discount, and the stock trades below the value of the Bitcoin holdings.

The liquidation floor

MicroStrategy’s total debt stands at $8.2 billion, while its Bitcoin holdings reach a value of $43.4 billion. The company keeps its bitcoins unencumbered, meaning it has not pledged them as collateral to bondholders. This status prevents a traditional margin call, as bondholders lack the legal right to force asset sales during a market crash. Bitcoin would need to decline to approximately $16,500 for the debt to exceed the total value of the company’s holdings. The company manages its maturity walls, such as the 2027 and 2029 notes, through various funding sources such as cash reserves and at-the-market stock sales. The company also maintains a dedicated USD cash reserve to cover at least 12 months of forward interest and dividend obligations. This reserve acts as a defense against short-term volatility. The board also retains the fiduciary flexibility to authorize limited asset sales through structured frameworks. One such framework, a $1.25 billion monetization window, permits the measured sale of Bitcoin over time. This acts as an emergency liquidity valve if traditional capital markets freeze. The firm carries approximately $6.7 billion in senior unsecured convertible notes, which do not require Bitcoin as collateral. Will the board eventually authorize the sale of Bitcoin to cover maturing notes if the price remains depressed?