Currently, MicroStrategy carries the following debt.

1. $650 million of convertible senior notes due December 15, 2025, consisting of $550 million of convertible notes and $100 million of options . The convertible notes has a coupon of 0.750% and is paid semiannually. The conversion price is $397.99 per share.

2. $1.05 billion convertible senior notes due December 15, 2027, consisting of $900 million of convertible notes and $150 million of options. Among them, the convertible bond is not interest-bearing and the conversion price is $1,432.46 per share.

3. $500 million junk bond due 2028 (senior secured notes) with a coupon rate of 6.125%, payable semi-annually, resulting in interest payments of $15,312,500 on June 15 and December 15 of each year.

4. $205 million worth of secured term loan due March 2025 with BTC collateral and maintain margin at 200% (i.e. $410 million of BTC).

Other than this, the majority of MicroStrategy's cash for the purchase of BTC was obtained through equity financing, which has no debt relationship and therefore is not subject to default. There are only three scenarios that could cause MicroStrategy to default on its debt and thus liquidate in bankruptcy: inability to pay the interest on the loan/notes, inability to repay the principal on the loan/notes, and a margin rate of less than 200%.

Using the four debts mentioned above, it can be estimated that MicroStrategy will have to pay at least $34.75 million (412.5+3062.5) in interest per year from 2022. Over the past two years, MicroStrategy's EBIT has been roughly $10 million per quarter (excluding BTC impairment losses), or $40 million per year.

Thus, MicroStrategy's operating profit can basically cover the interest on debt. This year's first-quarter earnings report showed that EBIT after excluding the impairment loss of BTC was only $40,000, due to a 3% year-over-year decline in operating income, which is alarming. But the company ended the quarter with about $92.68 million in cash, which will at least cover this year's interest payments.

As for repayment of loan/note principal, the earliest is March 2025. We can't predict what BTC's price will be three years from now, but we can at least be sure that the company won't be affected at this point.

Finally, there is the issue of margin rates. According to CEO Michael Saylor, MicroStrategy currently has 115,109 BTCs available as collateral, which is a margin rate of over 1300% at current prices. To trigger the liquidation condition, the price of BTC would need to fall below $3,562.

In summary, MicroStrategy only needs to ensure that interest expenses can be covered by profits each year, so that it will not be forced to sell BTC due to the debt crisis.

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