Strategy Posts $12.5B Loss as Bitcoin Drop Hits Holdings

Strategy reported a staggering $12.54 billion net loss in the first quarter, largely driven by a $14.46 billion unrealized markdown on its bitcoin holdings. Despite the headline loss, executives highlighted growing momentum behind its preferred STRC shares as a key positive.

The company said strong investor demand for STRC—now its primary funding engine for frequent bitcoin purchases—helped it raise $5.58 billion out of a total $11.68 billion secured so far this year. These funds have fueled its ongoing accumulation of Bitcoin.

STRC Emerges as Core to “Digital Credit” Strategy

Executives are positioning STRC as a cornerstone of Strategy’s evolving “digital credit” model. CEO Phong Le described the instrument as a “big success,” citing strong demand, high liquidity, and relatively low volatility.

STRC is designed to trade close to a $100 par value, with a flexible dividend rate that adjusts to maintain that level. Investors currently earn an annual yield of around 11.5%, while Strategy deploys the capital raised to purchase additional bitcoin.

Across its suite of preferred shares—including STRC, STRK, STRF, and STRD—the firm has paid out more than $692 million in cumulative dividends. Still, analysts remain divided on the sustainability of this approach.

Analysts argue the model depends on “circular” issuance, with some likening it to a Ponzi-like structure.

Supporters, however, see it as an innovative way to channel investor demand for yield into bitcoin exposure.

Matt Hougan, CIO of Bitwise Asset Management, recently described STRC as “a perpetual preferred stock that trades like equity but offers a bond-like dividend yield,” suggesting the company could raise billions more through the structure.

Meanwhile, analysts at Grayscale Investments argue that spot bitcoin ETFs remain the simplest and most transparent way to gain exposure to bitcoin without the added complexity of preferred stock instruments.

Bitcoin Volatility Drives Treasury Decline

The bulk of Strategy’s quarterly losses came from bitcoin’s sharp price decline during the period, when it fell more than 25% from around $90,000 to $65,000.

Despite the downturn, the company has continued accumulating aggressively. It now holds 818,334 BTC, valued at approximately $66.82 billion, with an average purchase price of $75,537 per coin.

Bitcoin has since rebounded, recently hitting a three-month high near $82,000, leaving Strategy with an unrealized gain of just under $5 billion on its holdings.