If you look at Strategy's balance sheet for how its Bitcoin is accounted for, you'll find something that may surprise you: for years it was recorded as an intangible subject to impairment, meaning it could be written down in the books but not up. The new FASB accounting rules, adopted in 2025, finally allow fair-value accounting — reflecting the real market value on the balance sheet.
But accounting is only the start. To really understand what a Bitcoin treasury holds, you have to go beyond the balance-sheet line items and look at four fundamental metrics.
The first is BTC per diluted share. Take total Bitcoin on the balance sheet and divide it by the fully diluted share count (including options, warrants and potential conversions). This number tells you how much Bitcoin belongs to you as a shareholder per share you hold. If it grows quarter over quarter, the company is creating value in Bitcoin terms regardless of what the price does — this is BTC Yield.
The second is the average cost basis. At what average price did the company buy its Bitcoin? If Strategy bought at an average of $45,000 and Bitcoin trades at $90,000, it has a 100% unrealised gain. If the price falls below the average cost, the company has unrealised losses — which does not mean insolvency, only that it would need to wait for the price to recover.
The third is mNAV: market cap divided by the market value of the Bitcoin. We explain it in detail in the mNAV pillar. Use it as an indicator of whether the stock is cheap or expensive versus the underlying asset, not as an absolute truth.
The fourth, and perhaps the most overlooked by novice investors, is the capital structure. How much debt does the company carry? At what cost? When does it mature? A company with $10 billion of convertibles maturing in 2027 carries a completely different risk from a debt-free one. If Bitcoin drops 70% and it has to refinance that debt in a hostile market, the shareholder can lose everything. Our stress test computes the BTC price at which each company runs out of margin.
Strategy carries several billion dollars of convertibles plus its four preferred series. It manages that liability by continuously issuing new capital. As long as it can, the system works. Systemic risk appears if the capital market closes and Strategy cannot refinance.
For investors coming from fixed income, Strategy's preferreds (STRK, STRF, STRC, STRD) are the most natural entry. For those coming from growth equity, MSTR shares at a low mNAV are the entry point. For those who simply want Bitcoin without complications, buying BTC directly remains the cleanest option.
There is no universal answer. But understanding the balance sheet lets you make the decision that fits your risk profile with real information, not hype.
