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BTC A company with an entirely objective of "buying Bitcoin with every available dollar," Strategy recently did something unusual.
According to an 8-K filing from the U.S. Securities and Exchange Commission (SEC), Strategy raised approximately US$467 million in net proceeds through its market offering program during the week of July 6 to 12, but did not invest any of that money in Bitcoin. Instead, it pushed its total dollar reserves to $3 billion, an increase of $450 million from the previous week. Bitcoin positions remained unchanged, still slightly below 844,000, worth approximately US$53 billion at current prices.
Why does cash keep piling up?
The answer lies in Strategy's balance sheet obligations. The company currently pays approximately $1.76 billion a year in interest and dividends, which are tied to various types of its preferred stock. This number has grown significantly as companies expand their capital structure to buy Bitcoin.
The core of the problem lies in STRC, Strategy's perpetual preferred stock. The stock, which has been trading below par for several weeks, currently stands at about $87, compared with a face value of $100. STRC is Strategy's preferred financing tool. When it is traded below par, raising funds through it is expensive and suggests that credit markets are under pressure on confidence in the company's ability to meet its obligations.
A few weeks ago, Strategy held about $1.4 billion in U.S. dollar reserves, a level that led traders to publicly question whether the company might eventually be forced to sell bitcoin to pay its dividend obligations. That concern became a reality last week when Strategy sold $216 million worth of bitcoin, the first bitcoin sale since 2022.
The framework behind the buffer mechanism
Last month, Strategy announced a "digital credit capital framework," a formal dollar reserve policy that includes up to $1 billion in preferred stock and common stock repurchases, and a "Bitcoin Liquidation Program" that allows it to sell up to $1.25 billion in Bitcoin to replenish reserves, pay dividends, or conduct buybacks. At the same time, the company also increased STRC's dividend yield from 11.5% to 12%, to push its price back to face value.
The $3 billion cash reserve is Saylor's move to further extend this "runway." This is not a retreat from Bitcoin's strategy, but an insurance against being forced to sell off the core assets that define the company.
