S&P Global Ratings has assigned a 'B-' credit rating to Strategy Inc., formerly known as MicroStrategy, a company known for its substantial Bitcoin holdings. This rating, revealed on October 27, 2025, places Strategy in speculative, non-investment-grade territory, often referred to as a "junk bond" rating. However, S&P stated that the company's outlook remains stable.
The agency cited several factors for the rating, including Strategy's high concentration of assets in Bitcoin, low U.S. dollar liquidity, and weak risk-adjusted capital. S&P also pointed to a currency mismatch between the company's debt and dividend obligations, which are denominated in U.S. dollars, and its primary asset, Bitcoin. This mismatch could create liquidity strain if Bitcoin's price declines.
According to its report, S&P views Strategy's high Bitcoin concentration, narrow business focus, weak risk-adjusted capitalization, and low US dollar liquidity as weaknesses. These are only partially offset by the company's strong access to capital markets and prudent management of its capital structure.
Strategy currently holds approximately $8 billion in convertible debt, with $5 billion of that currently out of the money, and faces $640 million in annual preferred dividends. S&P noted that the company plans to fund these obligations through at-the-market equity sales but emphasized that its reliance on capital markets and Bitcoin's volatility remain critical risks.
While Strategy's Bitcoin holdings, valued at over $73 billion, greatly surpass its debt obligations, S&P highlighted the company's "significantly negative" risk-adjusted capital (RAC) ratio as of June 30, 2025. The agency calculates this metric by subtracting Bitcoin's market risk from equity value, a factor that contributes to its weak capital profile. Additionally, Strategy's cash flow was negative $37 million in the first half of 2025, with most pre-tax earnings derived from unrealized gains on its Bitcoin holdings.
S&P's decision marks the first time a major credit rating agency has formally evaluated a company built on a Bitcoin-backed credit model. Strategy's executive chairman, Michael Saylor, stated on social media platform X that S&P Global Ratings has assigned Strategy Inc a 'B-' Issuer Credit Rating (Outlook Stable) — the first-ever rating of a Bitcoin Treasury Company by a major credit rating agency.
Despite the downgrade, Strategy's stock price reportedly rose. Saylor cast the credit rating as a positive development, noting that Strategy is the first digital asset treasury (DAT) to attract the S&P's notice.
The cryptocurrency community has criticized the rating, with some analysts alleging that S&P's methodology fails to grasp Bitcoin-based capital models. Analyst Adam Livingston blasted the rating as "ridiculous," arguing that it unfairly penalizes Strategy for holding Bitcoin by treating it as a liability. He further pointed out that S&P's methodology perceives the adoption of digital assets as a capital weakness—a bias that fundamentally discounts Bitcoin's role as a financial asset.
S&P cautioned that if Bitcoin prices fall while debt comes due, the company might be forced to sell assets at a loss or restructure, which S&P would consider a default.
