Strategy lost $8.2 billion, but investors only saw Bitcoin

Strategy posted a net loss of US$8.22 billion in the second quarter, but Bitcoin remains the focus of attention.

Strategy Company (Nasdaq: MSTR), which focuses on Bitcoin investments, recorded a net loss of US$8.22 billion in the second quarter, but Bitcoin position data remains the core indicator that investors pay most attention to.

Strategy held a total of 843,775 bitcoins as of July 26, but company executives rounded them to 846,000 when citing quarterly growth data. The purchase cost base of these bitcoins is US$63.69 billion. Based on the bitcoin price of US$64,915 on July 27, the current market value is approximately US$54.77 billion.

The average purchase cost per Bitcoin is approximately US$75,476. Positions increased by 11% during the quarter, and bitcoin content per share increased by 5%. Year-to-date bitcoin yields have reached 4.5%, total bitcoin holdings have increased by 29,997, and bitcoin gains denominated in US dollars have reached US$1.95 billion.

The software business continued to generate revenue, while Bitcoin investments reported a loss.

Strategy reported an operating loss of US$8.33 billion, compared with operating profit of US$14.03 billion for the same period last year. About US$8.32 billion of this came from unrealized losses on digital assets, compared with US$14.05 billion in unrealized gains in the same period last year.

After deducting the US$400.7 million preferred stock dividend, the loss attributable to ordinary shareholders was US$8.62 billion. In the same period last year, ordinary shareholders earned $9.97 billion in profit after paying a preferred stock dividend of $49.1 million. Diluted loss per share was $24.45, compared with diluted earnings per share of $32.60 for the same period last year.

Quarterly revenue increased 6.9% to $122.4 million from $114.5 million. Gross profit increased to US$81.6 million from US$78.7 million, but gross margin narrowed to 66.6% from 68.8%.

As of June 30, the company's cash reserves fell to US$1.71 billion from US$2.21 billion on March 31. At the same time, Strategy held $736.1 million in short-term investments, compared with zero at the end of March.

, said the size of convertible bonds fell 18% to approximately US$6.7 billion during the quarter, while U.S. dollar reserves increased 12% to US$2.4 billion. "Our goal is to have STRC trade between $99 and $100 over a period of time," Phong said. The company plans to continue repurchase below $100, and the size of the repurchase depends on price and liquidity. Phong pointed out that buying at a discount can reduce future preferred stock dividend payments, but the trading price level is determined by regular market demand.

Chief Financial Officer Andrew Kang said reserves were later increased to $3.75 billion, enough to cover more than 2.1 years of preferred stock dividends and interest expenses. Strategy has paid dividends on time for 18 consecutive months without interruption. Andrew said: "Our Bitcoin threshold annualized rate of return of 10.8% represents the current effective cost of credit." When the annualized rate of return on Bitcoin is above this threshold, the net bitcoin content per share will gain a positive spread.

, said that low sentiment in the Bitcoin market has not changed the "digital credit" plan. Michael said Strategy wants the STRC to be close to face value under conditions of stable demand, strong liquidity and low volatility. "Our plan is to get STRC back to health," he said.

Strategy sold securities, paid STRC dividends and bought back shares at below par prices

raised a total of US$8.4118 billion through market offerings in the second quarter. Among them, MSTR contributed US$2.9467 billion and STRC contributed US$5.465 billion. STRK, STRF, STRD and STRE did not generate any revenue. Between July 1 and 26, MSTR added another $1.276 billion, including shares sold but not yet settled as of July 26.

Strategy also bought back its $1.5 billion zero-coupon convertible bonds due 2029 with approximately $1.38 billion in cash in May. The deal was achieved at a discount of 8% on face value, reducing the outstanding principal of convertible bonds from $8.21 billion to $6.71 billion.

STRC paid a dividend of US$0.92 at an interest rate of 11% on January 31, based on the January 15 registration date; and US$0.94 at an interest rate of 11.25% on February 28, based on the February 15 registration date; Subsequently, US$0.96 was paid at an interest rate of 11.5% on March 31, April 30, May 31 and June 30, respectively, with the corresponding registration dates being March 15, April 15, May 15 and June 15, respectively.

Payment will be changed to half a month thereafter. Strategy paid $0.48 on July 15 to holders registered on June 30 at an 11.5% rate; paid $0.50 on July 31 to holders registered on July 15 at a 12% rate; and plans to pay another $0.50 on August 15 to holders registered on July 31. The 12% interest rate will remain until the STRC continues to trade near the face value of $100.

Between July 20 and 26, Strategy repurchased 288,930 STRC shares for approximately US$25 million, with a total par value of US$28.89 million. The average repurchase price was $86.53, which was 13.47% below the face value. Of the $1 billion "digital credit" repurchase program, approximately $975 million is still available. Strategy plans to increase repurchase efforts when discounts are large and reduce repurchase efforts when the STRC approaches $100.

In addition, there is an additional $1 billion MSTR repurchase program yet to be implemented. Strategy said it can buy back common shares if management believes they are undervalued.

The board of directors may authorize the sale of up to $1.25 billion in bitcoin to replenish U.S. dollar reserves. Companies may also sell Bitcoin to pay preferred stock dividends, pay interest, replenish reserves, or fund MSTR and "digital credit" buybacks. During 2026, Strategy sold approximately $218.4 million in bitcoin to pay part of its preferred stock dividend.