Strategy could begin selling Bitcoin holdings as tax threats stir concerns
- Strategy could risk shedding its over $65 billion Bitcoin reserve as the company shared risks surrounding its BTC acquisition plan.
- The company stated that if subjected to CAMT taxes from 2026, it could be forced to shed its Bitcoin holdings.
- Companies mimicking Strategy's Bitcoin model could become subject to similar tax obligations.
Strategy (MSTR) is modestly up on Thursday as the firm revealed that it could be forced to sell part of its Bitcoin (BTC) holdings if subjected to a corporate alternative minimum tax (CAMT) on unrealized gains from its digital asset reserve.
Strategy could face 15% tax on unrealized profit from Bitcoin holdings
“Strategy has been bold and they’ve won big so far. But their own documents show it’s a high-risk, high-reward strategy,” wrote CryptoQuant analysts in a report on Thursday. “It could unravel if BTC crashes, credit dries up, or tax hits.”
Strategy reiterated that it (formerly MicroStrategy) could face a CAMT tax on its over $65 billion Bitcoin holdings starting in 2026, according to the firm's Form 8-K filing with the Securities & Exchange Commission (SEC) on Monday.
The filing revealed risks associated with Strategy's Bitcoin playbook, which includes new accounting rules obligating the company to report unsold Bitcoin at fair value.
"We expect, given the magnitude of our unrealized gain on digital assets as of June 30, 2025, that we would become subject to the CAMT beginning in the 2026 tax year," the filing stated.
CAMT is a 15% minimum tax on the adjusted financial statement income (AFSI) of large corporations. It targets companies with an average annual AFSI exceeding $1 billion over three consecutive years.
Due to the likelihood of a 15% tax requirement on its unrealized gains, Strategy noted that it may be forced to sell off part of its Bitcoin holdings if unable to raise capital to meet these obligations.
"We may need to liquidate some of our [B]itcoin holdings or issue additional debt or equity securities to raise cash sufficient to satisfy our tax obligations," Strategy added in the filing.
Strategy also shared concerns regarding its current profitability with Bitcoin after it recorded unrealized gains of $14 billion in Q2. The firm stated that it could incur unrealized losses on its BTC holdings in the future, citing a $5.9 billion loss reported at the end of Q1.
Likewise, the company mentioned that it "had deferred tax liabilities" of $6.3 billion from its $14 billion unrealized gain at the end of Q2. It also shared that it held an outstanding indebtedness of $8.24 billion as of June 30 coupled with dividend payments on its preferred stock.
CryptoQuant analysts noted how this is a heavy cash burden despite Bitcoin's impressive price run.
Strategy added that its software business doesn't generate enough revenue to finance its operations. Hence, it expects to use capital from additional equity offerings to bridge the gap but may liquidate part of its Bitcoin holdings if the debt financing plans fail to meet its target. Such sales could be lower than its BTC average purchasing price, potentially affecting its overall financial operations.
"Any such sale of Bitcoin may have a material adverse effect on our operating results and financial condition, and could impair our ability to secure additional equity or debt financing in the future," the filing added.
Strategy further stated that it is still committed to acquiring Bitcoin as part of its long-term plan, depending on factors such as BTC's price, regulatory shifts and liquidity conditions. Strategy holds 597,325 BTC, which is 2.84% of Bitcoin's 21 million total supply.
The firm's risk warning comes as several companies are adjusting their treasury plans to adopt Bitcoin. With over 140 public companies holding BTC as a treasury asset, a significant surge in unrealized profits could result in similar tax obligations as Strategy.
MSTR is up 1% on Thursday, seeing lesser gains compared to Bitcoin, which has set a new record high above $113,800 with a 2.5% uptick over the past 24 hours at the time of publication.
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