Strategy Spends $200 Million on Bitcoin, Raises STRC Dividend Yet Again

Strategy has announced its third-largest Bitcoin purchase of the year, acquiring $200 million worth of the cryptocurrency. This acquisition was funded in part by proceeds from the issuance of preferred shares.

The company, based in Tysons Corner, Virginia, now holds approximately 720,750 Bitcoin, valued at around $49.5 billion. The recent purchase involved roughly 3,000 Bitcoin, bought at an average price of $67,700 each. Despite this acquisition, Strategy currently holds an unrealized loss on its Bitcoin holdings, as the asset's price has fallen below $76,000 in the past month. As of Monday, with Bitcoin trading around $68,452, the company's Bitcoin stockpile showed an on-paper decrease of $5.3 billion.

In parallel, Strategy's stock price saw a nearly 6% increase, reaching approximately $137 on Monday. However, the stock has experienced a significant decline of almost 60% over the last six months.

Last week, Strategy raised more capital than it spent on Bitcoin, generating around $33 million from the issuance of its variable rate preferred stock, known as STRC. The company has increasingly utilized this dividend-paying product as an alternative funding source, which co-founder Michael Saylor refers to as “digital credit.”

Strategy recently signaled on X that it was increasing the monthly dividend for STRC to 11.5%. This marks the seventh adjustment aimed at enhancing the product's appeal since its introduction in July as a low-volatility, high-yield cash instrument. Last week, the company raised $7.1 million through STRC, a modest amount compared to the $230 million raised from issuing common shares. By issuing preferred shares, Strategy aims to secure a consistent inflow of Bitcoin without diluting common shareholders, especially as its stock faces downward pressure amid concerns of a prolonged Bitcoin downturn.

To date, Strategy has issued $3.4 billion worth of STRC, including a $2.5 billion IPO in July that was upsized due to high demand. In the preceding month, Strategy raised $85.5 million via STRC, contrasted with $450 million obtained from selling common shares.

The company has accumulated billions in cash to facilitate pre-paid dividends. Despite this, some observers have questioned Strategy's long-term capacity to sustain these payments. Prediction markets indicate a 15% probability that Strategy will sell Bitcoin this year, a decrease from 28% a month prior.

Following a fourth-quarter loss of $12.4 billion attributed to significant fluctuations in its holdings' value, Michael Saylor stated that the company was strengthened by its “shift to digital credit, which aligns with our indefinite Bitcoin horizon.”