Convertible debt provides cheap capital, but comes with refinancing risk, pre-short sales, and multi-year overhangs.
One analyst has warned that the real risk for Bitcoin Treasury Company (BTCTC) is not the current price fluctuations in the market, but rather how it finances its acquisitions.
While convertible debt is often attractive, it poses a significant and underappreciated threat to companies’ Bitcoin strategies, said Brian Brookshire, head of Bitcoin at H100 Group.
Capital structure comes into focus as BTCTC expands BTC bets
In a recent post on X, Brookshire listed the menu of fundraising tools available to Bitcoin treasury companies and highlighted why they can be dangerous if misused.
Convertible bonds are at the center of that anxiety. This allows companies to raise capital at a premium to the spot share price, as seen in UK-listed The Smarter Web Company’s ‘Smarter Convert’ product. The product is fully underwritten for $21 million and is structured as a Bitcoin-denominated convertible note.
“Convertible debt can be issued on very favorable terms if issued under the right market conditions,” Brookshire said, “but they carry refinancing risk, often involve significant upfront short sales, and can take up to five years to mature.”
This is a direct warning to those trying to copy Strategy’s financial strategies. The very instruments that helped accelerate the accumulation of BTC could silently put companies in trouble when the market turns.
Paris-based Sequans became the first major treasury to liquidate part of its holdings, demonstrating this by selling 970 BTC for $93 million.
“It is critical that BTCTC’s management understands the trade-offs, takes a long-term view of how the use of certain financial instruments will impact the health of the business, and only issues debt or deploys certain strategies when the terms favor the long-term interests of shareholders,” the market observer added.
His comments come in the wake of increased scrutiny of corporate Bitcoin leverage, with a Keylock report earlier this year projecting a $12.8 billion debt maturity barrier for BTC-focused companies, much of it in convertible debt concentrated in 2027-2028.
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If the stock price falls below the conversion level, issuers may be forced to sell their Bitcoin holdings or accept tough refinancing terms, potentially driving down both the stock price and the cryptocurrency in a feedback loop.
Leverage market testing and mNAV Premium
Recent activity shows how entrenched BTC’s corporate strategy is. Despite Strategy’s mNAV multiple dropping from 1.52x to about 1.11x, Executive Director Michael Saylor told Fox Business that the company is designed to withstand an 80% to 90% decline in Bitcoin price.
On November 17, the company revealed its biggest acquisition since July, worth more than $830 million, and refuted rumors that it was selling off hidden assets.
In Asia, Tokyo-listed Metaplanet has increased its holdings to 30,823 BTC as of November 19, 2025 through a series of acquisitions. Meanwhile, WiseLink’s announcement in August that it would issue three-year convertible bonds to Nasdaq-listed Topwin International marked the first Bitcoin financial strategy by a Taiwanese-listed company, once again relying on convertible bonds to finance its BTC exposure.
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