Strategy’s record $20.9 billion quarter is a bitcoin mark-up, and bitcoin already trades below the price it was marked at

Update, 31 October 2026, 06:03 UTC: we have corrected two errors in our original report. We wrote that the 8-K gave no reason for Andrew Kang’s departure; the filing says he is resigning for personal reasons, not because of any disagreement with the company. We also called Reza Virasteh chief operating officer; his title in the filing is executive vice president of operations. This version also adds the terms of Kang’s separation and, as a separate item, the tax-related share sales he reported on Form 4 in 2026.

Strategy (Nasdaq: MSTR), the largest corporate holder of bitcoin, reported operating income of $20.91 billion and net income of $19.53 billion for the third quarter of 2026, the biggest quarter in its history, according to the earnings release filed with the SEC on Thursday 29 October. Almost all of it is one line: a $20.91 billion gain on digital assets, the rise in value of its bitcoin between 30 June and 30 September. The software business that once gave the company its name brought in $125.4 million of revenue.

The Strategy Q3 earnings are a record on paper, and the paper has already moved. The company carried its 847,666 bitcoin at $70.82 billion on 30 September, about $83,550 a coin. Bitcoin traded near $78,600 around 05:24 UTC on Friday 30 October, according to Coindaro’s market snapshot. If that level held until 31 December, the accounting rule that produced the Q3 profit would book a loss of roughly $4 billion in the fourth quarter.

Investors did not wait. MSTR closed Thursday’s regular session at $141.62, down 2.44%, and was quoted at $133.47 in after-hours trading at 23:59 UTC (7:59 PM EDT), 5.75% below the close, according to StockAnalysis data fetched on Friday at about 05:50 UTC. The same filing announced that chief financial officer Andrew Kang is leaving.

Strategy Q3 earnings in numbers: $19.5 billion of net income

Diluted earnings per share came to $44.75, against $8.42 in the third quarter of 2025, when operating income was $3.89 billion and net income $2.79 billion. After $419.6 million of dividends on its preferred shares, net income attributable to common stockholders was $19.12 billion, up from $2.65 billion a year earlier, when preferred dividends were $139.9 million. Basic earnings per share were $47.78.

Revenue fell 3% from a year earlier, from $128.7 million to $125.4 million. Gross profit was $89.6 million, a 71% margin. The company booked an income tax provision of $1.41 billion for the quarter, and its deferred tax liabilities stood at $1.40 billion on 30 September, down from $1.93 billion at the end of 2025.

Source: Strategy earnings release, exhibit 99.1 of its 8-K of 29 October 2026.

Where the $20.9 billion comes from

Strategy applies ASU 2023-08, the US accounting standard that values bitcoin at fair value at the end of every period and runs the change through net income. Before it, companies could only write bitcoin down after a fall and never back up. Now every quarter the whole holding is marked to the closing price, up or down.

So the Q3 result says more about the bitcoin price than about the company’s operations. The release itself puts the quarter’s rise at 43% for bitcoin and 76% for MSTR shares. Its own tables fit the first number: the carrying value of the holding worked out at about $58,700 a coin on 30 June and about $83,550 on 30 September, a rise of 42% on Coindaro’s arithmetic. The release does not split the gain between realised and unrealised parts.

It does not change the cash in the bank either. Nothing was sold at $83,550 to produce that income. What it moves is reported earnings, shareholders’ equity and the deferred tax bill, and with them the way index providers, lenders and preferred-share investors look at the company.

Nine months of 2026: still a $1.23 billion net loss

One record quarter has not made a profitable year. The same rule cost Strategy $14.46 billion in the first quarter and $8.32 billion in the second, when bitcoin fell. Add the third-quarter gain and the nine months to 30 September show a $1.86 billion loss on digital assets, an operating loss of $1.89 billion and a net loss of $1.23 billion.

After $1.05 billion of preferred dividends, the loss attributable to common stockholders comes to $2.27 billion, or $6.27 a share. Over the same nine months of 2025 the company had reported net income of $8.59 billion.

A year ago, on 30 September 2025, Strategy carried 640,031 bitcoin at $73.21 billion. It now holds about 207,600 more coins, and their book value is lower: $70.82 billion.

Strategy bought and sold bitcoin in the same quarter

In the third quarter Strategy bought 7,218 bitcoin for $588.1 million, paid for with sales of its class A common stock through its at-the-market programme. It also sold 5,552 bitcoin. The release ties that money to two uses: $239.9 million of preferred dividends and $108.6 million of repurchases of STRC, its variable-rate preferred share. Coindaro does not compute a profit or loss on those sales.

Since 1 January, bitcoin sales used to fund preferred dividends and STRC buybacks total about $431.8 million, the company says. Its board has also authorised up to $1.25 billion of bitcoin sales to fund the USD Reserve, the cash pile it keeps for dividends and interest.

On 25 October Strategy held about 848,517 bitcoin, bought for a total of $64.02 billion, or about $75,446 a coin on average. At the 23 October price of about $81,200 used in the release, they were worth $68.90 billion. Bitcoin purchases since January come to $14.33 billion. In the week of 19 to 25 October it bought no bitcoin and spent $204.9 million on STRC, as Coindaro reported on Monday.

BTC Yield turns negative: -3.7% so far in 2026

The figure Strategy has long put forward to its shareholders is BTC Yield, the change in bitcoin held per diluted share. It stood at -3.7% for the year to 25 October. The company translates it into a BTC Gain of -24,947 bitcoin and a BTC $ Gain of -$2.03 billion at $81,200.

A negative yield means each share now stands for less bitcoin than on 1 January, even though the company owns 26% more coins. The share count grew faster than the bitcoin pile. Strategy says these measures exclude fair-value gains and losses, so the record profit does not lift them.

$2.04 billion of STRC buybacks since January

Strategy raised $21.23 billion of capital this year. In the third quarter net proceeds from its at-the-market sales were $5.41 billion, all of it from MSTR common stock; it sold none of its STRC, STRK, STRF or STRD preferred shares in the quarter. From 1 to 23 October it raised a further $58.7 million, again only in MSTR.

Part of that money went back into its own preferred stock. Since January Strategy has repurchased 20,980,508 STRC shares, $2.10 billion of face value, for about $2.04 billion, at an average of $97.39, 2.6% under the $100 stated amount. The total includes shares bought but not yet settled on 25 October. About $956.7 million is left under the $3.0 billion programme, and the company says it intends to keep buying while STRC trades below $100.

Over the whole year bitcoin purchases, at $14.33 billion, are still about seven times the buybacks. October is different. Holdings rose by about 851 bitcoin between 30 September and 25 October, while STRC repurchases took $204.9 million in a single week. That shift is the one we described on 13 October.

“Strategy demonstrated its commitment to returning STRC to health,” chief executive Phong Le said in the release. The STRC dividend rate stays at 12.00%. The company has a separate $1.0 billion programme to buy back MSTR common stock and has not used it.

A $5.07 billion cash reserve against preferred dividends

The USD Reserve held $4.83 billion, and the company had another $242.4 million of USD Cash, for $5.07 billion in all. Strategy says that covers about 3.4 years of preferred dividends and interest. On the balance sheet at 30 September it showed $2.50 billion of cash and $3.40 billion of short-term investments. Preferred dividends paid since the first issue add up to $1.48 billion, with $136.4 million payable.

From 1 November STRC dividends accrue daily, after a shareholder vote on 28 October that we covered on Wednesday; for November the release puts the total at $1.00 a share. STRF, STRK and STRD follow on 1 January 2027. Le called the change “a natural step toward the tokenized, 24/7/365 financial system.”

The company also expects its preferred distributions to be treated as a non-taxable return of capital in the US for ten years or more, because it does not expect positive accumulated earnings and profits. That is a US tax position, set out in our guide to how crypto is taxed in the US; readers elsewhere, including in France and Italy, are taxed under their own rules and should check them with an adviser.

What happens to the gain if bitcoin stays down

The release gives no full-year 2026 guidance for operating income or net income, no year-end bitcoin price assumption and no table of outcomes at different bitcoin prices. The figures below are Coindaro’s own calculation from the filing, not the company’s.

The arithmetic is simple. With 848,517 bitcoin, each $1,000 move in the price changes the value of the holding by about $848.5 million, and pre-tax income by the same amount, before tax effects. Q4 starts from the 30 September mark of $70.82 billion, plus the roughly 851 bitcoin added in October: the cost basis rose from $63.95 billion to $64.02 billion, so the starting point is about $70.9 billion.

At $78,600, the level of Coindaro’s snapshot around 05:24 UTC on 30 October, the 848,517 bitcoin are worth about $66.69 billion. That is roughly $4.2 billion below the starting point for the quarter. It is not a forecast: the fourth-quarter result depends on the price at 31 December, and on any coins bought or sold before then.

Coindaro calculation from the 8-K release: holdings of 25 October, no further trades assumed, pre-tax. A lower fair value would also shrink the $1.40 billion deferred tax liability, which softens the hit to net income, as the tax benefit of $511.9 million booked over the first nine months shows.

The second line to watch is the average cost of $75,446. Above it, the holding is still worth more than Strategy paid; at $78,600 the cushion is about $2.67 billion, roughly 4%. Below it, the whole position would show a paper loss against cost.

None of this changes the cash the company owes. Its fixed obligations are preferred dividends, $419.6 million in the third quarter alone, and interest on its debt, set against a $5.07 billion reserve. A Q4 loss would change the headline figures and equity, at a moment when its index status is in question: MSCI’s rule on digital-asset treasury companies, which could drop Strategy from its global indexes on 30 November, comes into play within weeks.

Strategy’s CFO Andrew Kang steps down on 5 November

Kang will leave the CFO post on 5 November and stay on as an adviser until 31 December, according to the release and the 8-K filing, which reports the change under Item 5.02. Phong Le acts as principal financial officer in the meantime. Reza Virasteh, executive vice president of operations, becomes executive vice president and CFO on 1 January 2027, sharing the principal financial officer role with Le, who keeps the financial management of the bitcoin strategy. The Block reported the same timetable.

Kang’s last results came with a line on their size. “Q3 operating income of $21 billion was the largest ever in Strategy’s history,” he said in the release, before thanking colleagues for his four and a half years as CFO. The 8-K says his decision is “due to personal reasons and not the result of any disagreement” with the company on its operations, policies or practices.

Under the transition and separation agreement described in the 8-K, Kang keeps his regular base pay until 31 December. If he signs a general release of claims, he also receives, once the advisory period ends, a lump sum of $883,400 and six months of COBRA health cover valued at about $20,000. His equity awards keep vesting until 31 December, and any portion still unvested when his service ends is forfeited.

Separately, the Form 4s he filed in 2026 report sales of 43,897 Strategy shares on five dates between 12 March and 9 June, about $5.55 million by Coindaro’s addition. Each sale is reported as made under a Rule 10b5-1 instruction letter signed in May 2024 to cover his tax withholding when stock awards vest. The largest, 33,062 shares on 5 June, followed the vesting of 68,120 performance stock units; the last was 1,949 shares on 9 June. The 8-K does not mention them.

Executive chairman Michael Saylor looked forward rather than back: “We’re at the beginning of the next bitcoin bull market.” In the same statement he said bitcoin was 21% above its 200-week moving average.

MSTR falls 5.75% after hours

The 8-K was accepted by the SEC at 16:03 ET (20:03 UTC) on Thursday, just after the US close, and Strategy had scheduled a video webinar on the results for about 17:00 ET (21:00 UTC). The Block, in an article published at 16:58 ET, put the after-hours fall at about 3.5%. By 23:59 UTC the quote was $133.47, a 5.75% drop from the $141.62 close, according to StockAnalysis, which gave a market value of $54.41 billion. Coindaro did not check Friday’s pre-market price.

Open questions and dates to watch

• Whether Strategy restarts STRC issuance once the share trades back at $100; the release confirms only more buybacks while it sits below par, with $956.7 million of authorisation left.
• How much more bitcoin the company sells under its $1.25 billion authorisation to fund the USD Reserve.
• The 30 November MSCI decision date for digital-asset treasury companies.
• The bitcoin price at 31 December, which sets the size and sign of the Q4 fair-value result.
• The handover of the finance function: Kang leaves on 5 November, Virasteh takes over on 1 January 2027.

Euro-based shareholders also carry the dollar: the results are in US dollars, and the holding’s value in euros moves with both bitcoin and the euro-dollar rate. No action by France’s AMF or Italy’s Consob concerns the results.