Strategy Doesn’t Buy BTC But Increases USD Reserve to $3B

Strategy (formerly MicroStrategy) has announced an expansion of its cash holdings in a new 8-K filing with the SEC. The firm increased its USD reserves by $450 million, bringing its total fiat balance to $3.0 billion. 

This increase came from selling MSTR common stock - the firm raised roughly $467 million in net proceeds through its at-the-market (ATM) programme during the week of 6-12 July.

However, Strategy did not purchase any additional BTC during this period, keeping its total stack at just under 844K BTC, worth $53B. This accumulation of fiat is a break from the firm’s usual approach of continuously deploying available capital directly into BTC.  

Why is Strategy Building a Cash Buffer?

The decision to increase its USD holdings comes amidst a backdrop of intense market speculation regarding Strategy's complex capital structure. The BTC treasury company currently faces roughly $1.76 billion in annual interest and dividend obligations linked to its various preferred stock classes.

STRC - Strategy’s Perpetual preferred Stock - has been trading under par ($100) for weeks now. It is currently trading at $87. STRC is Strategy’s preferred funding mechanism.

A few weeks ago, Strategy held roughly $1.4 billion in USD reserves, leaving traders worried that the firm might eventually be forced to liquidate portions of its Bitcoin stack to meet its short-term dividend obligations. 

Then, on 29 June, Strategy announced a Digital Credit Capital Framework entailing a formal USD reserve policy, up to $1 billion each in buybacks for its preferred and common stock, and a BTC Monetisation Programme allowing it to sell up to $1.25 billion of bitcoin to top up the reserve, cover dividends, or fund repurchases. It also lifted the STRC dividend to 12% from 11.5%, effective 1 July, in a bid to pull the price back toward par.

Exactly one week ago, Strategy announced the sale of $216 million worth of BTC. 

This week, by bumping cash reserves to $3.0 billion, Michael Saylor has secured even more of a liquidity runway.  

Despite the pause in buying, Strategy remains the largest corporate Bitcoin holder globally. You can track Strategy on Arkham using the de-anonymized Strategy entity: https://arkm.com/explorer/entity/microstrategy 

Arkham has de-anonymized the vast majority of Strategy's corporate BTC wallets. You can set real-time alerts and track their treasury transactions directly on the platform.