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Strategy increases Bitcoin purchases through issuance of preferred shares
Last week, Strategy (MSTR) used perpetual preferred shares for the first time as the primary instrument for accumulating Bitcoin. This may indicate a shift in its approach to financing cryptocurrency purchases.
On Monday, the company reported that it acquired 22,337 $BTC over the previous week — the fifth-largest purchase in its history.
The issuance of perpetual preferred shares STRC amounted to $1.18 billion, equivalent to approximately 16,800 $BTC at an average price of $70,000. This significantly exceeds the $396 million raised through its at-the-market (ATM) common stock program, which had previously been the main method of increasing the company’s Bitcoin reserves. Its holdings now total 761,068 $BTC.
At the current dividend rate of 11.5%, the $1.18 billion issuance implies annual dividend payments of about $135 million. As a result, the company’s total annual dividend burden has exceeded $1 billion.
At the same time, the company has reserved approximately $2.25 billion in dollar reserves to meet these obligations — creating a financial buffer amid rising capital costs.
Since the price of the company’s common shares has fallen by more than 70%, it now has an incentive to support the share price without further diluting existing shareholders.
As a result, common equity may be used more selectively — primarily when the mNAV ratio (market value to net asset value) significantly exceeds 1 or when the company plans to increase its dollar reserves. In practice, this means reduced reliance on common stock sales and increased use of STRC, helping avoid issuing new common shares.
Thus, Strategy is increasingly financing its Bitcoin purchases through preferred capital, with STRC now playing a central role in this approach.
Is another dividend increase expected?
STRC is showing early signs of price pressure. After the dividend record date on March 15, the preferred shares have traded below their $100 par value for three consecutive days. Since the monthly volume-weighted average price has fallen below par, the company may raise dividends by an additional 25 basis points to support the price.
See also: "Taiwan-related risks worth $10.6 trillion have strengthened Bitcoin’s position in the market"
