Strategy sold 5.43 million Class A shares last week, raising $544.5 million, but did not buy any bitcoin with the proceeds. Instead, the company parked the cash in a reserve dedicated to paying preferred stock dividends and related interest expenses. This marks a sharp shift from their previous approach of issuing shares to directly buy more bitcoin.
From Growth Engine to Dividend Support
For years, Strategy's model was about raising equity at premiums to bitcoin holdings, using those funds to accumulate more bitcoin, and increasing their bitcoin-per-share value. This cycle attracted imitators and fueled a well-known growth loop in digital asset corporate finance. However, as bitcoin's premium shrank and the market evolved, the loop faltered and has now reversed direction.
Currently, Strategy holds 843,775 BTC, with an average cost of roughly $75,476 per coin, totaling a cost basis near $63.69 billion. Despite this, the bitcoin position is carried about $14 billion below cost. The new reserve reached $3.75 billion, intending to cover $1.76 billion in annual preferred dividend and interest obligations across five series. the preferred stock dividend rate rose from 11.5% to 12% starting July 1.
Strategy also disclosed a substantial $8.32 billion quarterly loss on digital assets in Q2. While the company no longer uses equity raises to expand bitcoin holdings, it now uses them to satisfy financial commitments tied to previously issued preferred stock. This strategy alters the risk profile and investor expectations, as the company essentially leverages common stock issuance to fund dividend payments rather than aggressive asset accumulation.
This material is for informational purposes and not financial advice.
