MarketsBitcoin
|5 min ReadMicroStrategy Burns $12.4B: The Infinite Money Glitch Breaks
Jax Morales
Senior Analyst
Published
Feb 6, 2026
MicroStrategy (MSTR) has ceased to be a functioning software company. With a staggering $12.4B Q4 net loss, it is now an exotic volatility derivative disguised as an equity.
The narrative of "infinite leverage" hit a wall on February 5. While Michael Saylor sells the dream of "BTC Yield," the balance sheet reveals a darker reality: the company is fighting gravity with a $9B floating loss on its books.
The Vanity Metric vs. GAAP Reality
Traders need to ignore the headline noise and look at the divergence. MSTR is running two sets of books.
The "Saylor Book" pushes a metric called BTC Yield, which hit 22.8% in 2025. This measures accretion—how many Satoshis back each share. It completely ignores the dollar value of those Satoshis. Even if Bitcoin drops to $10k, Saylor can claim success as long as he dilutes shareholders slower than he buys coins.
The "Real Book" (GAAP) tells the truth. Because MSTR adopted fair value accounting, every tick in Bitcoin's price hits the P&L immediately.
Q3: BTC at $114k = Record Paper Profits.
Q4: BTC at 17.4B Operating Loss.
The scary part? That 89,000 BTC. With Spot BTC currently trading near $64,000, the reality is significantly uglier than the PDF admits.
The $888 Million Vig
Here is the structural flaw in the flywheel. To raise $25.3B in 2025, MSTR had to get creative. They issued preferred stock offering yields between 8% and 11.25%.
This turned Bitcoin—a zero-yield asset—into a liability generating massive fixed costs.
Annual Interest/Dividend Bill: $888M.
Total Software Revenue: $477M.
The math is broken. The legacy business covers barely 50% of the debt service. MSTR is now forced to dilute shareholders not to buy Bitcoin, but just to pay the interest on previous buys. Saylor admitted as much, noting early 2025 issuances were to "defend the company's credit."
Underwater: The Premium Evaporates
For the first time since the 2020 pivot, the entire position is in the red.
Total Stack: 713,502 BTC.
Average Cost: $76,052.
Current Price: ~$64,000.
MSTR stock has collapsed 76% from highs, falling faster than Bitcoin itself. This compresses the NAV premium, which is the fuel for the entire engine. If the premium dies, they cannot issue accretive equity. If they cannot issue equity, they cannot buy the dip. The flywheel halts.
The 2027 Kill Switch
The risk isn't immediate liquidation. MSTR has no forced margin calls and sits on $2.25B in cash (enough for ~2.5 years of debt service).
The real threat is Q3 2027. This is the first redemption window for their convertible bonds. If Bitcoin hasn't reclaimed the 100k range by then, bondholders will demand cash repayment rather than converting to stock.
If MSTR is forced to sell BTC into a bear market to pay off creditors, the "Diamond Hands" narrative shatters. Until Bitcoin reclaims $76,052, Saylor isn't a genius allocator—he's just a fund manager with a massive expense ratio and a bleeding balance sheet.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.