• MicroStrategy announced the redemption of $1.05 billion in 2027 convertible notes, offering equity conversion at a discounted rate of $142.38 per share.
• The move comes amid debates on unrealized capital gains taxes, as MicroStrategy faces potential liabilities on its $49 billion Bitcoin holdings.

MicroStrategy, the largest corporate holder of Bitcoin, announced its decision to redeem $1.05 billion worth of its 2027 convertible senior notes, offering noteholders the option to convert their securities into company equity.

According to the company’s statement, each $1,000 of principal value can be exchanged for 7.0234 shares of MicroStrategy’s Class A stock, equating to approximately $142.38 per share—a significant discount compared to its current trading price of $374.36.

The move is seen as a strategy to reduce the company’s debt burden while encouraging noteholders to convert their holdings into equity. Noteholders have until February 24 to either redeem their securities at face value or opt for the conversion.

The announcement comes amid growing discussions about the implications of the Corporate Alternative Minimum Tax (CAMT) under the Inflation Reduction Act of 2022. MicroStrategy and Coinbase have jointly voiced opposition to the taxation of unrealized capital gains, arguing that the tax structure creates “unjust and unintended consequences” for companies holding digital assets.

MicroStrategy, led by Executive Chairman Michael Saylor, currently holds 461,000 Bitcoin valued at approximately $49 billion, with its latest acquisition of 11,000 BTC for $1.1 billion marking the largest purchase in 2025. While the firm has not sold any Bitcoin, it faces potential tax liabilities on unrealized gains.

However, some tax analysts believe the Internal Revenue Service (IRS) might rule in MicroStrategy’s favor, citing similar exemptions granted to companies like Berkshire Hathaway for securities.

Despite its aggressive Bitcoin strategy, concerns persist about the risks involved. David Krause, a finance professor at Marquette University, warned that MicroStrategy’s heavy reliance on Bitcoin could expose the firm to severe financial instability. Sharp declines in Bitcoin’s price could erode shareholder equity and jeopardize the company’s ability to meet its financial obligations, potentially leading to bankruptcy.

Market reactions to the redemption notice and the broader debate around unrealized capital gains taxes have been mixed. Critics argue that such taxation could discourage investment in digital assets, given the inherent volatility of the crypto market.

Editorial Note: This news article has been written with assistance from AI. Edited & fact-checked by Harshajit Sarmah.