MicroStrategy Announces Debt Buyback Amidst Potential Tax on Bitcoin Gains
In the dynamic world of finance and cryptocurrency, MicroStrategy has made a significant move. According to data from SaylorTracker, shares of MicroStrategy are currently being traded at a net asset value (NAV) of 1.86x. MicroStrategy (MSTR) has issued a redemption notice for its 2027 convertible senior note tranche, which is valued at a staggering $1.05 billion. Moreover, the company has declared that it will settle all conversion requests for this note offering.
As per a January 24 announcement, note-holders have until February 24 to make a crucial decision. They can either redeem their securities at 100% of the principal amount or convert each $1,000 block of notes into Class A MicroStrategy stock at approximately $142 per share. This announcement from the company comes at a time when there are reports of a potential tax bill on a massive $19 billion in unrealized capital gains. This tax threat is due to the Corporate Alternative Minimum Tax (CAMT) stipulated in the Inflation Reduction Act of 2022.
The news of the redemption notice has received a mixed response from market participants. Simultaneously, these market players have been engaged in an intense online debate about the potential implications of unrealized capital gains taxes on digital assets.
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Potential Trouble Looming Ahead?
Digital assets are particularly vulnerable to unrealized capital gains taxes. This is mainly because of the high volatility that is an inherent characteristic of the crypto markets. Imposing taxes on unrealized capital gains not only acts as a deterrent to investment but could also spell serious trouble for companies like MicroStrategy. MicroStrategy has adopted a Bitcoin treasury strategy as a means to preserve its purchasing power.
On January 2, Coinbase and MicroStrategy jointly sent a letter to the US Internal Revenue Service (IRS) to voice their opposition to the Corporate Alternative Minimum Tax. In the joint letter, it was stated, “The unforeseen combination of CAMT and a newly promulgated accounting standard are creating unjust and unintended tax consequences.”
MicroStrategy's Bitcoin holdings have been a topic of great interest. In January 2025, its Bitcoin ($BTC) holdings surpassed 450,000 Bitcoin, making it the largest corporate holder of the asset globally. According to the SaylorTracker website, as of now, MicroStrategy holds 461,000 BTC, which is valued at approximately $49 billion. The company's investment in Bitcoin has seen an increase of nearly 68%.
The company's most recent Bitcoin purchase, made on January 21, added 11,000 BTC to its balance sheet. This is the largest acquisition made by the company in 2025 so far.
David Krause, a finance professor at Marquette University, recently shared his insights with Cointelegraph. He opined that Saylor’s Bitcoin acquisition strategy could potentially erode shareholder equity. The professor issued a warning that sudden and sharp drops in the price of Bitcoin could severely compromise MicroStrategy’s ability to pay back its creditors. In the worst-case scenario, it could even lead the company to bankruptcy.