Strategy: No BTC Purchase - Raises $525M Cash

‍

Strategy (formerly MicroStrategy) continues its pause on Bitcoin accumulation, opting instead to once again fortify its fiat liquidity. For the fifth straight week, Michael Saylor's firm has not purchased any BTC. 

USD cash reserves were increased by $525 million and have now reached $3.75 billion, securing over two years' worth of dividend and interest coverage.

You can interact with Strategy’s entity on Arkham in the window below. (Note: Arkham has de-anonymized 83% of Strategy’s BTC, and 140K of its stack is held on their behalf by Fidelity Custody.)

‍

Building the $3.75 Billion Cash Buffer

The firm's shift toward cash accumulation began weeks ago amidst market speculation regarding its capital structure. Strategy has around $1.76 billion in annual interest and dividend obligations linked to its preferred stock classes.

To fund these obligations, the company initially turned to its digital treasury. Strategy sold 3,588 BTC for $216 million at an average price of $60,200. The proceeds were earmarked for dividends on its Digital Credit securities (STRC, STRK, STRD, STRF, and STRE).

However, rather than continuing to sell Bitcoin (as some people expected), the company has pivoted to raising capital through equity. Strategy raised roughly $467 million in net proceeds by selling MSTR stock between July 6-12, bringing reserves to $3.0 billion. The trend continued the following week with an additional $263.5 million in stock sales, pushing reserves to $3.225 billion.

This week, Strategy raised $525 million after selling $544.5 million worth of MSTR stock. The USD reserve sits at $3.75 billion. This cash buffer easily covers its $1.76 billion in annual obligations for more than two years, theoretically removing the need for further liquidations.

The Digital Credit Capital Framework

This approach to treasury management was formalized in late June. On June 29, Strategy announced a Digital Credit Capital Framework designed to provide structural stability. The framework established a formal USD reserve policy as well as authorization for up to $1 billion each in buybacks for both preferred and common stock. It also introduced a BTC Monetisation Programme allowing the firm to sell up to $1.25 billion of Bitcoin to top up reserves, cover dividends, or fund repurchases. 

Additionally, Strategy increased the STRC dividend from 11.5% to 12%, effective July 1, aimed at pulling the preferred stock price - which had been trading under par ($100) since mid-May - back toward par.

Strategy Remains the Largest Corporate Holder

Despite the five-week pause in buying and the earlier sale of 3,588 BTC, Strategy's position in the crypto market remains unmatched. The firm is still the absolute largest corporate holder of Bitcoin globally, retaining a total stack of 843,775 BTC acquired at a total cost of $63.7 billion. This puts its average purchase price at just over $75,000, placing the company on approximately $9 billion in unrealized paper losses.

You can track Strategy on Arkham using the de-anonymized Strategy entity.