MicroStrategy (MSTR) has issued a notice of redemption for its $1.05 billion 2027 convertible notes and is cancelling all exchange requests for the notes issuance.
Since the January 24 announcement, bondholders have until February 24 to redeem their securities for 100% of the principal amount of the notes or every thousand dollar denomination into MicroStrategy Class A shares at a price of approximately $2.142 per share.
The company’s announcement comes amid reports that the Alternative Minimum Tax on Corporations in the Control of Inflation Act of 2022 could result in penalties of $16 billion in unrealized capital gains.
News of the retraction notice evoked mixed reactions from market participants, and simultaneously drew online debates about inappropriate capital gains tax on digital assets.
What are the potential issues?
Digital assets are vulnerable to inappropriate capital gains tax due to the high volatility inherent in the crypto market.
Taxing unrealized capital gains could not only discourage investment but also negatively impact companies such as MicroStrategy that have adopted bitcoin financial strategies to preserve purchasing power.
On January 2, Coinbase and MicroStrategy sent a letter to the US Internal Revenue Service (IRS) expressing their opposition to an alternative minimum tax on corporations.
“The unpredictable combination of CAMT and newly introduced accounting standards is creating unfair and unnecessary tax consequences,” the joint letter read.
In January 2025, MicroStrategy’s Bitcoin holdings exceeded 450,000 Bitcoins at $104,414, making the company the largest corporate holder of the asset in the world.
According to the SaylorTracker website, MicroStrategy now holds 461,000 BTC, worth an estimated $49 billion, an increase of nearly 68% in its investment.
The company purchased Bitcoin on January 21, adding 11,000 BTC to its balance sheet, making it the largest acquisition so far in 2025.
David Krauss, a finance professor at Marquette University, recently told Cointelegraph that Saylor’s Bitcoin acquisition strategy could be detrimental to shareholder capital.
The professor warned that a sudden, sharp drop in the price of Bitcoin could affect MicroStrategy’s ability to repay its creditors, potentially leading to bankruptcy.
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