Strategy’s tax exposure is a head-on collision with a cash flow gap

For years, Michael Saylor has proudly declared that Strategy would “never sell” its Bitcoin. That mantra faces a stern test with new taxation laws. Fresh SEC filings and tax rules mean some of the coins in Strategy’s 597,325 BTC (roughly $67 billion at current prices) treasury may have to go.

In a July 7 Form 8‑K, Strategy laid out a new headache: under accounting standard ASU 2023‑08, it must mark its Bitcoin to market each quarter, recording unrealized gains as income.

Risk: Tax bills may force BTC sales

Strategy writes:

"We may need to liquidate some of our bitcoin holdings or issue additional debt or equity securities to raise cash sufficient to satisfy our tax obligations."

In plain terms: if tax hits, BTC may need to be sold. pic.twitter.com/6ENYrQhhTf

— CryptoQuant.com (@cryptoquant_com) July 10, 2025

That boost to paper profits carries a downside. Starting in 2026, the U.S. will slap a 15% Corporate Alternative Minimum Tax (CAMT) on companies with over $1 billion in adjusted income, potentially crystallizing billions in tax bills on gains the company hasn’t sold.

Strategy once reported Bitcoin at purchase cost, shielding those sky‑high gains from its income statement. Now, every uptick in Bitcoin’s price inflates taxable income, whether the company moves a single coin or not.

In practical terms, Saylor’s empire could face a multi‑billion‑dollar tax hit, even if its Bitcoin stash stays untouched.

A thread on X (formerly Twitter) by analytics firm CryptoQuant, posted Thursday, July 10, 2025, summarized the risk in stark terms. “The company might owe cash taxes on unrealized BTC gains,” the firm wrote, adding that Strategy’s own disclosures admit it may need to liquidate some of its Bitcoin holdings or issue additional debt or equity to meet those obligations.

Strategy’s tax exposure is a head-on collision with a cash flow gap

Strategy’s own filings admit that its software business doesn’t generate enough cash to cover these new obligations. The company already carries $8.2 billion in convertible debt and $3.4 billion in preferred stock, which together demand well over $350 million a year in interest and dividends.

If cash from operations falls short, Strategy may need to borrow more, tap equity markets, or, contrary to its long‑held vow, sell Bitcoin.

Indeed, the company spells it out unflinchingly: “We may need to liquidate some of our bitcoin holdings or issue additional debt or equity securities to raise cash sufficient to satisfy our tax obligations.”

This raises a key question: if the company cannot raise new capital through debt or equity issuance, will it be forced to tap into its Bitcoin reserves?

Yes, they've sold BTC before.

Despite the “we never sell” meme…

📉 They sold BTC in Q4 2022 (as disclosed in prior SEC filings).

A reminder: nothing is off the table if liquidity is tight. pic.twitter.com/xdiaYOQ0Kr

— CryptoQuant.com (@cryptoquant_com) July 10, 2025

Custodial risk is another issue outside Saylor’s control

Strategy acknowledged that even its custodial arrangements for Bitcoin may not be bulletproof. If a custodian fails, they may not be able to access their Bitcoin, as the company warned that its tokens could be treated as part of the custodian’s estate, effectively rendering Strategy a general unsecured creditor.

To its credit, Strategy has been transparent in outlining these threats. “This is not intended to spread fear, uncertainty, or doubt,” CryptoQuant wrote in its final post on the topic. “It simply summarizes what’s written by Strategy themselves in their official SEC filing.”

Strategy’s bitcoin holdings represent roughly 3% of the token’s total circulating supply. Any move under distress, whether to cover taxes or obligations, could considerably impact the market.

For now, Strategy remains one of the largest and boldest corporate holders of Bitcoin. But the company’s own documents suggest that it understands that its Satoshi-centric model, while immensely profitable on paper, is also vulnerable.

However, if anyone has the answers to these doubts, it’s probably Saylor.

KEY Difference Wire: the secret tool crypto projects use to get guaranteed media coverage