 MicroStrategy announces debt buyback amid potential tax on BTC gains 
2025-01-25
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MicroStrategy (MSTR) has issued a redemption notice for its 2027 convertible senior note tranche, valued at $1.05 billion, and will settle all conversion requests for the note offering.
According to a Jan. 24 announcement, note-holders have until Feb. 24 to redeem their securities at 100% of the principal amount or convert each $1,000 block of notes to Class A MicroStrategy stock at roughly $142 per share.
The company’s announcement came amid reports of a potential tax bill on $19 billion in unrealized capital gains due to the Corporate Alternative Minimum Tax stipulated in the Inflation Reduction Act of 2022.
News of the redemption notice received mixed reactions from market participants, who were simultaneously engaged in an online debate about unrealized capital gains taxes on digital assets.
Potential trouble ahead?
Digital assets are particularly sensitive to unrealized capital gains taxes due to the high volatility inherent to the crypto markets.
Taxing unrealized capital gains not only discourages investment but could spell trouble for companies like MicroStrategy that have adopted a Bitcoin treasury strategy to preserve purchasing power.
On Jan. 2, Coinbase and MicroStrategy sent a letter to the US Internal Revenue Service (IRS) opposing the Corporate Alternative Minimum Tax.
“The unforeseen combination of CAMT and a newly promulgated accounting standard are creating unjust and unintended tax consequences,” the joint letter read.
MicroStrategy’s Bitcoin BTCUSD holdings surpassed 450,000 Bitcoin in January 2025 — making it the largest corporate holder of the asset in the world.
According to the SaylorTracker website, MicroStrategy currently holds 461,000 BTC, valued at approximately $49 billion, and is up nearly 68% on its investment.
The company’s most recent Bitcoin purchase on Jan. 21 added 11,000 BTC to its balance sheet, which is the largest acquisition in 2025 so far.
David Krause, a finance professor at Marquette University, recently told Cointelegraph that Saylor’s Bitcoin acquisition strategy could erode shareholder equity.
The professor warned that sudden, sharp drops in the price of Bitcoin could compromise MicroStrategy’s ability to pay back creditors and may even lead to bankruptcy.