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BTC Strategy did not increase its holdings in Bitcoin for three consecutive weeks and instead bought back preferred shares.
According to the company's Form 8-K filing with the U.S. Securities and Exchange Commission (SEC), Strategy has not made new Bitcoin purchases for three consecutive weeks. In a September 14 filing, it was disclosed that the company spent $139.3 million to repurchase $139.3 million worth of STRC preferred stock in the week ended September 13.
Since the company disclosed on August 31 that it had purchased 4,603 bitcoins at a price of nearly US$370 million, its Bitcoin reserves have remained unchanged at 845,050. In the ten weeks before that, the company had not purchased any bitcoins.
Money flows: From Bitcoin to own shares
Strategy, led by Michael Saylor and the world's largest enterprise-level Bitcoin holder, is continuing to steer cash towards its goal of restoring its STRC preferred shares to a par value of $100. According to the September 14 SEC filings covering the period from September 8 to 13, Strategy repurchased 1,420,467 STRC shares.
According to Google Finance data, STRC shares closed at US$98.64 on the previous trading day, below the company's US$100 face value target. Management believes that repurchase of shares at a price below US$100 has a value-adding effect, as cancellation of these shares at a discounted price will exempt the company from future dividends.
STRC has a higher priority than MSTR common stock and is positioned as short-term "digital credit" backed by company cash and bitcoins, but investors have no direct claim on the bitcoins themselves.
It is worth noting that the company has neither sold any bitcoins nor operated in its "mark-to-market equity plan." This is the second consecutive week Strategy has not touched MSTR common stock.
Bitcoin Treasury Estimates and Funding Structure
Bitcoin Treasury estimates that Strategy's total cost of Bitcoin reserves is approximately US$63.73 billion, with an average unit price of approximately US$75,412 per piece, and a current valuation of approximately US$66 billion.
The latest STRC repurchase funds come from Strategy's "dollar cash pool," which is the more flexible of its two dollar reserves. As of September 13:
- Dollar Reserves: Funds set aside to pay dividends on preferred shares and interest on debt, with a balance of US$5.1 billion.
- USD Cash: The balance is US$1.3 billion.
Repurchase behavior is on a regular trend
As Cryptopolitan reported last week, Strategy had previously spent US$176.3 million to repurchase 1,810,885 STRC shares, and subsequently announced that its board had approved a doubling of the cap of its "Digital Credit Securities Repurchase Program" to US$2 billion.
After the latest round of repurchase, documents show that the remaining funds available for repurchase of preferred shares are US$1.05 billion, and the repurchase amount for MSTR common shares is US$1 billion.
On the company's credit dashboard, Thaler released data on September 14 showing that based on the assumptions of an annualized bitcoin return of 10%, a volatility of 40%, and a bitcoin price of US$77,266, the STRC's "BTC credit" spread is 57 basis points, and the U.S. dollar duration is 3.9 years.
According to Google Finance, MSTR's closing price on the previous trading day was US$130.97. Among the 197 listed companies that engage in some form of Bitcoin accumulation counted by Bitcoin Treasures, Strategy still ranks first, ahead of Twenty One Capital, Metaplan and MARA Holdings.
