Strategy Becomes First Bitcoin Company to Get S&P Credit Rating

TLDR

• S&P Global Ratings gave Strategy (formerly MicroStrategy) a B- credit rating, placing it in “junk bond” territory, marking the first time a Bitcoin treasury company has received an S&P assessment.
• The rating cites Strategy’s high Bitcoin concentration, narrow business focus, weak risk-adjusted capitalization, and low US dollar liquidity as major weaknesses.
• Strategy holds 640,808 BTC worth roughly $70 billion but has only $15 billion in convertible debt and preferred equity, with minimal cash reserves and negative operating cash flow.
• S&P warns of a “currency mismatch” where all debts are in US dollars while assets are in Bitcoin, creating potential liquidity problems if Bitcoin prices fall.
• The company must improve dollar liquidity and reduce debt reliance to achieve an upgrade, with an investment-grade rating requiring six levels of improvement from current B- status.

S&P Global Ratings assigned Strategy a B- credit rating on Monday. This marks the first time the credit agency has evaluated a company focused primarily on holding Bitcoin as its core business model.

The B- rating places Strategy in non-investment grade territory. This category is commonly known as junk bonds.

Strategy holds 640,808 Bitcoin in its treasury. The company accumulated this position mainly through equity and debt financing.

The rating reflects concerns about Strategy’s business structure. S&P cited the company’s high Bitcoin concentration and narrow business focus as key weaknesses.

Strategy’s software business operates at roughly breakeven. From January to June 2025, the company posted negative $37 million in operating cash flow.

The firm has minimal cash reserves despite holding Bitcoin worth approximately $70 billion. Outstanding convertible debt and preferred equity total around $15 billion.

Currency Mismatch Creates Risk

S&P identified what it calls a currency mismatch in Strategy’s balance sheet. All company debts must be repaid in US dollars while nearly all assets are held in Bitcoin.

This structure could force Strategy to sell Bitcoin at unfavorable prices. Such a scenario might occur if the company cannot raise new capital during a market downturn.

Strategy owes over $640 million annually in preferred stock dividends. The company has stated it plans to fund these payments through new equity sales rather than selling Bitcoin.

S&P noted that Strategy can defer dividend payments. However, doing so would trigger governance penalties including granting preferred shareholders board seats.

Rating Methodology and Future Outlook

S&P excludes Bitcoin from equity calculations in its methodology. The agency cites Bitcoin’s volatility and uncorrelated market risks as reasons for this treatment.

This accounting approach leaves Strategy with negative total adjusted capital on paper. The calculation stands despite the company owning billions in digital assets.

The rating agency assigned a stable outlook to Strategy. S&P based this assessment on the company’s track record of managing debt maturities and accessing capital markets.

Strategy’s next major debt maturity does not occur until 2028. This timeline provides the company with some flexibility.

An upgrade to investment grade would require Strategy to reach BBB- status. This represents six levels above the current B- rating.

S&P stated an upgrade is unlikely in the next 12 months. The agency said improvement would require increased dollar liquidity and reduced reliance on convertible debt.

Executive Chairman Michael Saylor noted the rating represents a milestone. He highlighted that Strategy became the first Bitcoin treasury firm to receive a major credit agency rating.

The rating did not negatively impact Strategy’s stock price. MSTR shares rose 2.27% on Monday following the announcement.

Strategy’s rating matches Sky Protocol’s B- score. Sky Protocol, formerly MakerDAO, received its rating in August 2024.

The company’s stock performed well in 2024 with a 430% gain. However, MSTR has declined 13% so far in 2025.

Bitcoin rallied over the weekend to $115,500. Strategy shares climbed nearly 3% on Monday alongside the cryptocurrency’s price increase.

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