- MicroStrategy launched a new online calculator to show its ability to cover debt with its Bitcoin holdings.
- The tool allows users to adjust key assumptions like Bitcoin Price, volatility, and long-term performance.
- Default values in the calculator project high returns and do not let users enter negative Bitcoin growth or true bearish scenarios.
- The company holds 592,345 Bitcoin, valued at approximately $63 billion, against $8.2 billion in outstanding debt.
- The model does not account for risks like liquidation or major business disruptions, presenting a consistently positive outlook.
MicroStrategy released an online calculator on Monday designed to show its future ability to pay debts using its Bitcoin reserves. The company unveiled the BTC Credit Model through its official website, featuring interactive inputs for price, volatility, and expected returns of Bitcoin.
As of now, MicroStrategy has $8.2 billion in debt and a treasury holding of 592,345 Bitcoin, worth about $63 billion. The BTC Credit Model calculator updates coverage ratios for the company’s debt, including different debt maturities up to the year 2032, as users change input values.
When initialized, the calculator uses default assumptions such as a 30% annual return on Bitcoin and a 50% yearly standard deviation in returns over seven years. According to these settings, MicroStrategy’s current Bitcoin stockpile would cover debts maturing in 2028 by a factor of 62, and debts maturing by 2032 by a factor of seven.
However, the calculator’s setup draws attention for starting with highly bullish estimates. Setting 30% annual Bitcoin growth would project Bitcoin’s price above $650,000 by 2032, suggesting a market capitalization larger than $13 trillion. The calculator does not let users input negative Bitcoin price growth or create projections for multi-year declines, a notable omission given Bitcoin’s history of bear markets.
The model also refuses to illustrate full risk of liquidation. Even at minimum settings—with Bitcoin at $10,000, maximum volatility, and 0% annual return—the model still forecasts that current holdings can cover debts, showing only an 86.91% chance of being at risk by 2032. It does not account for unpredictable events like lawsuits, wars, or business disruptions.
Despite these limitations, MicroStrategy’s strong Bitcoin reserves are more than enough to currently meet its debt obligations. The tool, found on the corporate site, excludes negative scenarios, presenting a favorable view of the company’s financial health.
For industry readers, it is notable that all calculations relate to the U.S. dollar value of Bitcoin and debt, with coverage ratios based on projected market values as modeled on the company’s platform.
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