Strategy Posts $8.33 Billion Operating Loss As Downturn Pushes Bitcoin Below Acquisition Cost

Bitcoin treasury company Strategy has reported a second-quarter operating loss of $8.33 billion, largely due to an unrealized loss of $8.32 billion on its Bitcoin (BTC) holdings. The company currently holds 843,775 BTC, worth $54.77 billion, significantly lower than the $63.69 billion acquisition cost.

Strategy has created a $3.75 billion cash reserve as part of its BTC monetization program to support interest and dividend obligations.

Strategy Losses Deepen

Strategy has reported an operating loss of $8.33 billion in Q2 as unrealized losses on its Bitcoin holdings climbed to $8.32 billion after Bitcoin prices declined substantially. The flagship cryptocurrency traded around $88,400 at the end of 2025 and was near $64,700 when Strategy announced its quarterly earnings. The decline pushed the value of Strategy’s Bitcoin holdings below their aggregate purchase cost of $63.69 billion.

The company recorded an operating loss of $8.33 billion, and a net loss of $8.22 billion, working out to $24.45 per diluted common share. In comparison, Strategy’s net income stood at $10.00 billion during Q2 2025. The quarterly earnings report did not have much impact on Strategy (MSTR) shares. MSTR rose 4.7% during regular trading hours before registering a marginal decline following the report.

Meanwhile, Strategy’s core software business reported quarterly revenue of $122.4 million, a 6.9% increase from a year earlier, and gross profit stood at $81.6 million.

Bitcoin Bet Weighs Heavy

Strategy’s Bitcoin holdings stood at 843,775 BTC as of July 26, with an acquisition cost of $63.69 billion. The company’s Bitcoin holdings are currently valued at $54.77 billion, putting them $8.92 billion underwater. However, this loss is unrealized and reflects the change in BTC’s market value rather than an actual loss from selling the position. Strategy has also sold a small portion of its Bitcoin holdings to fund its dividend obligations, as the company continues to monetize its portfolio when necessary.

Strategy Building Dollar Reserve

Strategy’s capital markets programs have helped raise $17.06 billion this year while reporting a Bitcoin yield of 4.5%. The company also repurchased $1.5 billion of its senior convertible notes at an 8% discount, cutting its convertible debt to $6.71 billion. The move reduces Strategy’s debt burden after declining Bitcoin prices put substantial pressure on its balance sheet. Strategy also expanded its US Dollar Reserve by $525 million to $3.75 billion. The company stated that the reserve can cover dividend obligations for 2.1 years under its current policy. However, it conceded that it cannot guarantee payments under changing or adverse market conditions.

Strategy has also initiated repurchase programs for its common shares and digital credit securities, giving the company the option to buy back securities without using the entire authorized amount.

Strategy Must Maintain Liquidity Phong Le

Strategy CEO Phong Le stressed the importance of maintaining liquid US Dollars to fund dividend obligations during the company’s earnings call. Le stated:

“We thought that liquid Bitcoin would be important, but what Mike [Michael Saylor] mentioned earlier is that the people who are holding these preferreds don’t look at Bitcoin the way they look at U.S. dollars.”

Le stressed that ensuring a Dollar reserve to cover two to three years of dividend obligations is a prudent strategy.

Market Impact

Strategy is the largest publicly traded holder of Bitcoin, giving US investors indirect exposure to the flagship cryptocurrency. The company’s shares reflect fluctuations in Bitcoin’s price and also respond to equity issuance, debt costs, preferred dividends, and any change to its capital structure.

Strategy’s cash reserve and lower convertible debt give the company some financial flexibility. However, the value of its Bitcoin holdings must recover above the acquisition cost. A further decline in Bitcoin prices could deepen unrealized losses and increase pressure on the company.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.