Strategy Builds $1.44B USD Reserve as Bitcoin Stockpile Hits 650,000 BTC
Strategy Inc. announced it has established a $1.44 billion US dollar reserve and increased its bitcoin holdings to 650,000 BTC following a new purchase of 130 coins. The company disclosed that this latest acquisition cost approximately $11.7 million, with an average price of roughly $89,960 per bitcoin. This brings Strategy's total bitcoin investment to $48.38 billion, at an average cost of $74,436 per BTC.
The firm explained that the US dollar reserve is intended to support dividend payments on its preferred stock and interest on its outstanding debt. Strategy funded this reserve through proceeds generated from sales of Class A common shares via its at-the-market offering program. Management indicated its current intention is to maintain sufficient cash reserves to cover at least 12 months of these obligations, with a plan to build this buffer to 24 months or more, contingent upon market conditions and liquidity requirements.
According to the company, the dollar reserve now serves as a complement to Strategy’s bitcoin reserve, which accounts for approximately 3.1% of the eventual 21 million BTC supply. Executives stated that this structure is designed to provide the firm with the flexibility to meet fixed payment obligations without necessitating the sale of bitcoin, while continuing to view BTC as a long-term treasury asset. Strategy noted that the size and terms of the reserve are subject to its sole discretion and may be adjusted in response to shifts in funding costs, bitcoin prices, and capital market opportunities.
Schiff Criticizes Saylor After STRC Dividend Jumps to 10.75%
Michael Saylor shared on X that Strategy’s STRC preferred stock now carries a 10.75% interest rate, following what he described as "another rate hike last night." This increase is a recent development in Strategy’s evolving capital structure.
Shortly thereafter, noted bitcoin critic Peter Schiff publicly criticized both the move and Strategy’s underlying business model. He asserted that this development signals "the beginning of the end" for MSTR, and argued that Saylor was selling stock not to acquire more bitcoin, but to generate U.S. dollars to satisfy interest and dividend payments. Schiff characterized the stock as "broken," labeled the business model a fraud, and accused Saylor of misleading investors.
In a subsequent post, Schiff elaborated that Strategy is now selling equity to raise capital, which is then used to purchase U.S. Treasuries yielding approximately 4%. This contrasts with the company's own debt and preferred stock, on which it pays interest rates ranging from 8% to 10%. He questioned the longevity of investor confidence in this strategy, suggesting it may be perceived as a leveraged approach to bitcoin speculation.
MicroStrategy Trades at a Significant Discount to Its Bitcoin Holdings
MicroStrategy shares experienced a decline of about 12% on the day, marking a 57% decrease since October 6th. This downturn has reduced the company’s market capitalization to approximately $45 billion. Concurrently, the firm holds 650,000 bitcoin, valued at roughly $55 billion, as reported by The Kobeissi Letter. This analysis highlighted that the company's stock is now trading around $10 billion below the stated value of its bitcoin reserves.
Even after accounting for MicroStrategy’s reported debt of $8.2 billion, the firm’s net bitcoin position remains close to $46.8 billion. This figure still exceeds the company’s market capitalization by approximately $1.8 billion, and does not include any cash assets on its balance sheet. The Kobeissi Letter framed this valuation gap as an indicator of the significant repricing of the stock by investors and raised questions about executive chairman Michael Saylor's ability to continue increasing the firm’s bitcoin holdings under these market conditions.