Michael Saylor Strategy (NASDAQ: MSTR) has expanded its recent conservative line to manage its $1 billion bitcoin reserve, with the company directing the roughly $467 million it raised last week into its dollar reserve rather than buying bitcoin, according to a Securities and Exchange Commission filing on Monday.
The decision, which pushed the company’s US dollar reserves to $3 billion, could set up a long-awaited quiet week for a company that has been in the headlines recently for selling off a stash of BTC that its vocal boss has consistently insisted will never be sold.
Cryptopolitan mentioned in previous coverage how the company has sparked criticism and suggestions about its management style in the rules of the game for Bitcoin accumulation.
How much Bitcoin does the strategy have now?
According to A July 13 Form 8-KStrategy’s Bitcoin holdings remain unchanged from their previously announced balance of 843,775 BTC. Instead, the $466.7 million it raised went into a $3 billion cash reserve earmarked for periodic dividend payments to holders of the company’s preferred stock.
It is worth noting that, unlike last time, this week’s increase came from the sale of common stock, which is good news for supporters who would rather not see the company give in any further in the future.Never sell a position.
The strategy still maintains a significant lead over the second-largest Bitcoin holder, but its position is also deep in the red. With bitcoin trading near $62,800 on Monday, the company paying an average price of $75,476 on 843,775 bitcoins, the Michael Saylor-led company is sinking billions on its $63.69 billion in spending.
Why does the strategy need to hold cash?
The strategy has heavy fixed liabilities on its preferred share classes, and there is a buffer to cover these liabilities. The cash supports dividend payments on its preferred stock and interest on its debt, the company said.
These payments are not small. In late June, Strategy adopted a capital framework that raised the annual dividend on its STRC preferred stock, nicknamed “Stretch,” to 12%, its eighth rate increase.
STRC closed on Friday At $87.48 on the Nasdaq, below its face value of $100, according to Google Finance. Ripple CEO Brad Garlinghouse called the discount on this stock a “pretty damning indictment” in a… CNBC interviewArguing that “financial engineering does not deliver long-term value.”
Why did the strategy modify its accumulative playbook?
The decision to raise cash rather than buy Bitcoin comes after a period in which the strategy began to do something it had long sworn off: selling.
Between June 29 and July 5, the company sold 3,588 bitcoins for about $216 million, its largest sale to date, and directed the proceeds toward preferred stock dividends. Saylor confirmed the sale on X, writing that the coins were sold “to fund dividends on our digital credit notes.”
This framework, put in place in late June 8K, gives management discretion to sell bitcoin, buy back shares, and maintain an official dollar reserve. It authorized up to $1.25 billion of reserve-building capacity through a Bitcoin monetization programIn addition to two separate $1 billion repurchase programs for preferred and common stock.
None of these buttons obligate the Company to act. Last week, the company did not use any of its Bitcoin capacity and instead relied on stock sales to raise cash.
The market read the update calmly. MSTR traded down about 3% ahead of Monday’s open, as Bitcoin fell over the weekend. Google Finance The stock showed around $94.64 at Friday’s close, near the low end of a 52-week range that had previously reached $457.22.
