Bitcoin per Share

Imagine a company with 120 BTC and 6000000 shares. BTC is the unit symbol for bitcoin; USD means US dollars. In our own example, 120/6000000 = 0.00002 BTC, or 2000 sats per share. Sats are small bitcoin units: 1 BTC = 100000000 sats. This is not 2000 BTC or an amount in USD. It simply allocates corporate holdings across shares for comparison. It does not create a separate wallet containing that amount for the shareholder. The terms of a share determine its rights; division alone creates no right to withdraw bitcoin. [6] [1]

Strategy is a company that holds bitcoin. Its gross BPS uses Assumed Diluted Shares: existing shares plus shares that could arise under the calculation’s assumptions. A convertible note represents a loan to the company that can be exchanged for shares on agreed terms. Preferred stock can give its holders priority in payments to shareholders or in the distribution of assets on liquidation; only some preferred stock can convert into common shares. Here Strategy assumes conversion of all convertible notes and convertible preferred stock, and also includes options and share awards. An option is a right to buy shares on specified terms. It does not count only conversions that are currently advantageous, or in-the-money. It does not use the treasury-stock method, an accounting approach involving assumed share repurchases. Our example has 100 existing and 20 potential additional shares against 120 BTC: that gives 1.2 BTC per existing share, but 1 BTC including the potential shares. This is a corporate KPI (Key Performance Indicator), a supporting indicator of strategy, not earnings per share under US accounting rules, GAAP. [1]

Start with our own example of 100 BTC and 100 shares. The company buys 20 BTC and issues 10 shares. The ratio rises to 120/110, about 1.0909. If it issues 30 shares for the same purchase, the result is 120/130, about 0.9231. The change from the original ratio is approximately +9.09% or −7.69%. Bitcoin holdings increased in both cases, but bitcoin per share moved in opposite directions. This is what dilution means for this particular ratio. For a real issuance, check BTC acquired after costs and the exact share count used by the methodology. [1] [2]

FASB sets US accounting standards. Its rule ASU 2023-08 applies to certain crypto assets. It distinguishes fair value, their current market value, from the quantity reported. Our example still holds 120 BTC against 120 shares. If bitcoin falls from 100 to 60 USD, BPS stays at 1, while gross dollar value per share falls from 100 to 60 USD. Accounting remeasurement alone does not subtract BTC; neither did historical impairment accounting, which reduced their carrying value. Selling coins or actually losing them is a different event. Nor does a dollar conversion automatically equal a share price. Here gross BPS is in BTC per share, and the dollar figure values only the company bitcoin corresponding to a share; the bitcoin prices are illustrative. [4] [1]

A stock split divides shares into more units. Our example has 100 BTC and 100 shares. A 2:1 split raises the share count to 200, making BPS 0.5 instead of 1. Someone holding 10 shares now holds 20 and still owns 10%. They have not lost half their stake. Without adjusting the historical series, a chart would misleadingly show a 50% loss. A split alone raises no new capital and changes no corporate bitcoin holdings. Compare figures adjusted for the same split. [3]

Alongside the gross ratio, Strategy uses Net BPS. It deducts specified creditor and preferred shareholder claims after accounting for USD Assets and uses a different share count, Fully Diluted Shares. Convertible instruments whose conversion is currently advantageous are reflected in shares; others enter deducted claims according to the notes. Senior claims are paid ahead of common shareholders in a liquidation. USD Assets is the company’s label for specified dollar reserves and cash, not all assets valued in dollars. Converting deducted claims into BTC requires the bitcoin price at the measurement time. Net BPS can therefore change even if bitcoin holdings and the share count stay the same: at a lower bitcoin price, the same dollar debt represents more BTC. In our simplified example, deducting claims worth 30 BTC from holdings of 120 BTC, across 100 shares, leaves 0.9 BTC per share rather than gross 1.2. Under this method, do not deduct the same convertible claim from holdings and also count it as additional shares: that would count it twice. Net BPS does not deduct every possible liability and is not a universal measure of the company’s net worth. [1]

In our example, the company finances another 20 BTC with nonconvertible debt worth 20 BTC. This is the loan’s value translated into bitcoin at the same illustrative price, not necessarily a loan repayable in BTC. That debt does not turn into shares. Gross BPS moves from 100/100 to 120/100, but deducting this debt still leaves a value of 100 BTC before other items. A higher ratio has not made the creditor disappear. Gross BPS does not deduct all debt or preferential rights to assets and dividends. Strategy’s common stock, traded under the symbol MSTR, is not a voucher for withdrawing corporate bitcoin. Even positive BTC Yield, the indicator of change in gross BPS, does not establish a rising share price, a dividend payment or the ability to pay bills on time. [1] [2]

Read the company’s original filing and notes; for US issuers, SEC EDGAR is a public database of regulatory filings. SEC is the US Securities and Exchange Commission. For Strategy or another company, check BTC holdings, date, existing and potential shares, debt and custody. Custody here means who protects the keys that authorize spending the bitcoin, whether the company itself or a provider. Our own example has 120 BTC on Monday and 100 shares last month: mixing those dates gives 1.2. With the current 125 shares, the correct ratio is 0.96. Likewise, do not replace the share count at a specific moment with the weighted average over a period used in earnings per share. That average weights shares by how long they were outstanding during the period; it does not say how many exist right now. A dated report records the past, not automatically the present. [5]