Four years ago, MicroStrategy co-founder and Chairman Michael Saylor, turned to Bitcoin as a way to invest the company’s excess cash rather than traditional assets like short-term Treasuries. This decision has transformed the software firm into the largest corporate holder of the largest cryptocurrency on the market, with a Bitcoin stockpile now worth nearly $15 billion.

However, as analysts are starting to pay closer attention, a new question has emerged: can MicroStrategy’s underlying enterprise software business keep pace with its rapidly growing Bitcoin holdings?

MicroStrategy May Pause Bitcoin Purchases

According to a Bloomberg report, revenue from MicroStrategy’s software operations has stagnated in recent quarters, even as the value of its Bitcoin investments has surged. This has raised concerns about the company’s ability to cover the incremental interest expense associated with the convertible debt it has issued to fund its Bitcoin purchases.

Lance Vitanza, an analyst at TD Cowen, emphasized the importance of ensuring that MicroStrategy’s cash flows can cover the interest expenses associated with the convertible debt issued by the company. Vitanza’s analysis suggests that any underperformance in the software business could leave “little margin for error.”

Vitanza estimates that MicroStrategy has about $45 million in interest expense and $20 million in cash taxes this year, against around $82 million in earnings before items such as taxes. This tight cash condition, he says, could prompt the company to hold off on issuing additional debt to buy more Bitcoin until next year.

To fund its Bitcoin acquisitions, MicroStrategy has leveraged various avenues beyond operational cash flow, including issuing over $2 billion in convertible notes this year.

Quarterly Losses Loom

Cash flow could also be affected by an accounting change coming next year that requires MicroStrategy to value its digital assets to market. The company has warned that it may need to pay a 15% corporate alternative minimum tax if its average annual adjusted financial statement income for any consecutive three-tax-year period preceding the tax year exceeds $1 billion.

“If we become subject to these new taxes under the IRA for these or any other reasons, it could materially affect our financial results, including our earnings and cash flow, and our financial condition,” the company said in a recent filing.

Despite these concerns, MicroStrategy’s shares have surged 156% this year, outperforming the roughly 50% jump in BTC’s price during the same period.

However, the company is expected to post a quarterly loss of 78 cents per share, and may need to record an impairment charge on its Bitcoin stash, which could make it unprofitable for 12 of the 16 quarters since it started buying Bitcoin.

At the time of writing, BTC is trading at $64,200, down over 3% in the last 24 hours, causing a correction in the majority of the top 100 cryptocurrencies by market capitalization list.