Strategy, formerly MicroStrategy, reported a net loss of USD 8.22 billion for the second quarter of 2026, driven almost entirely by the revaluation of its Bitcoin holdings under fair-value accounting rules.

The company is the largest publicly listed corporate holder of Bitcoin, with holdings representing roughly 4% of all Bitcoin ever mined. It has funded its acquisitions through convertible bonds, common share issuance, and preferred share classes including STRC, STRK, and STRF. Despite the quarterly loss, Bitcoin holdings grew 11% during the period.

Fair-Value Accounting Drives the Swing

Of the reported USD 8.22 billion net loss, USD 8.32 billion stemmed from unrealised valuation losses on Bitcoin holdings, meaning the paper loss exceeded the net loss. At the operating level, the group posted a result of minus USD 8.33 billion, compared to a profit of USD 14.03 billion in the year-earlier quarter.

Since January 1, 2025, fair-value accounting under FASB ASU 2023-08 has required calendar-year public companies to mark Bitcoin holdings to market each quarter. Book gains and losses flow directly through the income statement regardless of whether any coins are sold. The rule applies to every U.S.-listed company holding crypto assets on its balance sheet, but Strategy's position — the largest among public corporations — makes it the most visible illustration of the standard's quarterly impact. In the year-earlier quarter, Strategy reported a profit of USD 10.02 billion. The company now reports a loss of USD 24.45 per diluted share, compared to a profit of USD 32.60 twelve months prior.

The Bitcoin price fell more than 40% year over year. At the end of July, it stood at approximately USD 65,028, well below Strategy's average cost basis of USD 75,476.

Software Business Remains Small

The legacy software business continued to contribute only marginally. Revenue rose 6.9% in the quarter to USD 122.4 million, with a gross margin of 66.6% yielding a gross profit of USD 81.6 million. Against Bitcoin holdings valued in the tens of billions, that contribution barely registers and cannot offset valuation swings in the treasury position.

Bitcoin Holdings Reach Record Before Slight Trim

Alongside the loss, Bitcoin holdings grew 11% during the quarter to a record 846,000 BTC. The company subsequently trimmed the position, reporting 843,775 BTC in an 8-K filing. Year-to-date growth in holdings stands at 25%, even as the price declined over the same period.

Cumulative acquisition costs total USD 63.7 billion, corresponding to an average cost basis of roughly USD 75,476 per Bitcoin. At the end of July, the market value of the holdings reached only approximately USD 54.77 billion, leaving the position just under USD 9 billion below acquisition cost.

Actual coin sales follow a fixed framework. Since the start of the year, the group has sold roughly USD 218 million worth of Bitcoin through its Bitcoin Monetization Program, with proceeds covering preferred dividends. While modest relative to total holdings, the mechanism marks a turning point: Bitcoin holdings now serve as a liquidity source for ongoing obligations, whereas the position previously grew almost exclusively through purchases.

Capital Structure Shifts Toward Dollar Reserve

On the liabilities side, Strategy reduced outstanding convertible bonds by 18% to USD 6.71 billion, down from USD 8.21 billion in the previous quarter. In May 2026, the company repurchased convertible bonds with a face value of USD 1.5 billion at an 8% discount, resulting in a purchase price of approximately USD 1.38 billion — USD 120 million below face value.

Simultaneously, the group built a dollar reserve that rose 12% to USD 2.4 billion by quarter-end and subsequently climbed to USD 3.75 billion. Cash and equivalents stood at USD 1.71 billion at the end of June. According to CFO Andrew Kang, the reserve covers more than 2.1 years of preferred dividends and interest obligations.

The reserve is governed by the "Digital Credit Capital Framework" adopted at the end of June 2026, which requires a minimum reserve covering twelve months of such obligations — approximately USD 1.76 billion at the time of adoption. The framework also permits Bitcoin sales of up to USD 1.25 billion, provided they are cheaper than issuing new MSTR common shares.

To build the reserve, Strategy paused all Bitcoin purchases in the five weeks before the earnings report — a notable shift for a company that had channelled nearly every available dollar into Bitcoin for years. The strategic priority has moved from accumulating holdings to serving capital providers.

"We have also built a track record of 18 consecutive months of dividend payments. Despite the recent steep drop in the Bitcoin price, we have never missed a dividend." — Andrew Kang, CFO, Strategy

STRC Buybacks and Issuance Activity

The shift was prompted in part by the performance of the STRC preferred share, which originally launched with an informal price target of approximately USD 100 but recently slipped below that level. CEO Phong Le announced that the company would buy back STRC shares below the USD 100 mark on a regular and disciplined basis, with volume guided by market price and liquidity conditions. In the week before the quarterly report, Strategy acquired 288,930 STRC shares for USD 25 million. Each repurchased unit reduces future dividend obligations, particularly because buybacks occur at a discount.

On the issuance side, capital inflows remain substantial. Year to date, Strategy raised USD 17.06 billion through its at-the-market (ATM) programmes, with STRC issuance alone contributing USD 7.53 billion — a growth of 254% for that instrument. In the second quarter alone, approximately USD 8.4 billion flowed in through the ATM programmes, of which USD 2.95 billion came from MSTR common shares and USD 5.47 billion from STRC. The authorised USD 1 billion buyback programme for common stock went unused.

Strategy shares gained approximately 5% on the day of the earnings release and traded unchanged in after-hours activity at USD 97.21. Book losses of this magnitude can reverse just as quickly if the Bitcoin price rebounds, while debt reduction is permanent. For the broader Bitcoin treasury model adopted by other companies, the key question remains whether dividend obligations can stay covered without reliance on fresh capital inflows.