MicroStrategy's ambitious plan to buy $42 billion more worth of bitcoin is not without risks, as successful execution relies on favorable financing conditions and strong investor demand for convertible debt.
The cost of servicing its debt is rising; whereas in 2021 MicroStrategy raised debt at zero-coupon convertibles, these coupon rates have since increased with new issues.
Being deeply tied to its bitcoin holdings poses risks for MicroStrategy, including potential valuation declines if assets are sold and significant tax implications on unrealized gains.
Michael Saylor has expressed that he is not interested in selling the company's bitcoin holdings, stating, 'Bitcoin is the exit strategy', highlighting commitment to long-term investment.
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