Michael Saylor’s crypto project pounded after US$12.4 billion loss

Published Fri, Feb 6, 2026 · 06:43 AM

[NEW YORK] Bitcoin’s plunge below US$65,000 is intensifying the crisis rocking the digital-asset complex, and few companies are more exposed than Michael Saylor’s Strategy.

In an earnings announcement on Thursday (Feb 5), the Bitcoin-hoarding company confirmed a net loss of US$12.4 billion for the fourth quarter, driven by the mark-to-market decline in its vast holdings. That pain deepened this week, as fresh market turmoil pushed the firm’s Bitcoin stash below its cumulative cost basis for the first time since 2023, and erased the token’s post-election gains.

The former enterprise software firm had long defied gravity by turning its equity premium into a token-acquisition machine. At its peak, Strategy shares traded so far above the value of its holdings that the company could issue new stock, buy more Bitcoin, and repeat the cycle. But with that premium now gone – and capital markets tightening – the model has stalled.

No new equity raise or debt issuance was announced. And in a departure from the pattern that has largely defined the company since 2020, Strategy did not offer a fresh vehicle or vision to finance additional purchases. That, combined with Saylor’s more defensive posture of late, marks a sharp break from prior quarters, when each sell-off brought a new round of bravado and capital-financing taps.

Saylor has said the company faces no margin calls and has US$2.25 billion in cash, enough to cover interest and distributions for more than two years. But with Bitcoin trading firmly below the firm’s US$76,052 cost basis, pressure is building.

Strategy reiterated on Thursday that it does not expect to generate earnings and profits in the current year or the foreseeable future. Based on these expectations, the firm expects that any distributions to holders of its perpetual preferred shares are tax-free for now.

“At this point, the focus is on Strategy’s intentions regarding the raising of capital to fuel its Bitcoin purchases in the face of challenging market conditions,” said Mark Palmer, an analyst at Benchmark, which has a “buy” rating on the common shares. “In this environment, the company is looking for its STRC perpetual preferred stock to be a driver of that effort.”

Strategy holds over 713,000 Bitcoin, valued at about US$46 billion. In late January, it added another US$75.3 million of Bitcoin, a signal that the accumulation drive remains, at least formally, intact.

But Michael Burry rekindled scrutiny of Strategy this week, warning that Bitcoin’s drop could trigger a “death spiral” among corporate holders and leave Saylor’s firm billions underwater. His remarks revived a long-running critique echoed by short-sellers such as Jim Chanos, who flagged Strategy’s reliance on non-earning assets and speculative leverage well before the recent breakdown.

For much of the past four years, Strategy operated as a high-beta proxy for Bitcoin exposure. Its shares surged more than 3,500 per cent between 2020 and 2024, outperforming major indexes and attracting both speculators and sceptics. The firm’s rise as a high-octane Bitcoin proxy – first through equity sales, then debt – made it a lightning rod for critiques of speculative leverage and corporate crypto exposure.

The engine was always on shaky ground. Spot Bitcoin ETFs have made exposure cheaper and cleaner, eroding Strategy’s niche. With token volatility rising and digital-asset liquidity fading, many of the same investors who once chased leveraged upside are now pulling back.

Saylor has been managing expectations more overtly. His statement on profitability functions as a subtle repositioning. The underlying message: Strategy shouldn’t be judged by short-term market swings. By framing profitability as a distant prospect, Saylor is inviting investors to treat the company less like a software firm or trading proxy – and more like a long-duration Bitcoin trust, anchored to the token’s trajectory rather than quarterly earnings.

Investors beg to differ. The stock is down almost 80 per cent since reaching a record high in November 2024. BLOOMBERG