Strategy posts $12.5 billion Q1 loss as Bitcoin slump hits its 818,000 BTC stack
Strategy Inc., the software-company-turned-largest-corporate-Bitcoin-holder on the planet, reported a $12.54 billion net loss for the first quarter of 2026 today.
The headline number is brutal: a $14.46 billion unrealized loss on digital assets, driven by Bitcoin’s 23% decline during the quarter. That translates to a diluted loss of $38.25 per share. Bitcoin went down, and because Strategy holds more Bitcoin than any other company on Earth — approximately 818,334 coins, or about 3.9% of all Bitcoin in existence — the accounting damage was enormous.
The company’s average cost basis sits at roughly $75,500 per coin, while Bitcoin’s market price hovered near $78,400 as of early May. That slim $2,900-per-coin cushion represents about $2.3 billion in total unrealized gain across the entire stack.
Strategy pulled in $7.37 billion through at-the-market equity offerings in Q1 alone, then added another $4.32 billion between April 1 and early May, nearly $12 billion in four months during Bitcoin’s worst three-month stretch since 2018.
## The preferred stock machine
The centerpiece of the capital-raising operation has been STRC, the company’s preferred equity instrument that Saylor calls “Digital Credit.” Launched nine months ago in July 2025, STRC has grown to an $8.5 billion market capitalization, making it the largest preferred stock by market cap globally. The instrument pays an annualized dividend that has crept up from 11% in January to 11.5% by March, working out to roughly $0.96 per share per month. Strategy has now met 23 consecutive dividend distributions totaling over $693 million.
“STRC has scaled to $8.5 billion in just 9 months and is now the largest preferred stock by market cap in the world,” Saylor said, noting the instrument carries a 2.53 Sharpe ratio.
Corporate treasuries including Prevalon, Strive, and Anchorage now hold $150 million in STRC. Another $270 million sits in decentralized finance protocols. Strategy has proposed doubling STRC’s dividend frequency to twice monthly.
## The software business
The actual software business continues to exist. Revenue reached $124.3 million in Q1, up about 12% year over year. Gross margins came in at 67%.
## Strategy’s dominance of corporate Bitcoin buying
Data indicates that Strategy accounted for 97.5% of net new corporate Bitcoin purchases as of January 2026. For every dollar other companies collectively invested in Bitcoin for their treasuries, Strategy invested roughly $39. More than 140 companies now hold Bitcoin on their balance sheets.
CEO Phong Le pointed to a broader institutional wave, noting that Morgan Stanley, Goldman Sachs, and Citi have all announced Bitcoin ETF, trading, custody, or lending services.
## Debt and tax considerations
Strategy carries approximately $8.2 billion in total debt, with $6 billion in convertible notes collateralized by Bitcoin. The company held $2.21 billion in cash at quarter’s end, down slightly from December. The company’s expectation that its preferred equity dividends will be treated as non-taxable return of capital for the foreseeable future is worth watching, as any change in earnings and profits calculations could alter that favorable tax treatment.
Strategy’s transformation from enterprise software vendor to what it now calls a “Bitcoin Treasury Company” began in August 2020, when Saylor first designated Bitcoin as the firm’s primary reserve asset. In the roughly six years since, the company has acquired more than 800,000 coins and built an entire capital structure around the thesis that Bitcoin is a superior store of value.
This is a developing story.
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