Strategy, the Bitcoin treasury company chaired by Michael Saylor, is officially opening the door to Bitcoin sales as it tries to calm pressure around its preferred-stock stack.
The company said on June 29 that its board approved a new Digital Credit Capital Framework covering cash reserves, STRC dividends, preferred-stock buybacks, common-stock buybacks and a BTC monetization program.
- Strategy said it "may sell BTC from time to time" to raise up to $1.25 billion for its dollar reserve, pay or replenish preferred-stock dividends and debt interest, or fund repurchases of preferred shares and common stock.
The company noted that the program doesn't force it to sell BTC or repurchase securities as any sale would depend "on market conditions, trading prices, liquidity, applicable legal requirements, and other factors."
Thomas Braziel, founder and managing partner of 117 Partners, a distressed-investing and advisory firm focused on crypto bankruptcy claims and special situations, wrote on X that Strategy's plan would be "a win for Bitcoin, a win for the common shareholders, and a win for the preferred holders."
Thomas Braziel
But the shift is hard to miss given that Strategy is now explicitly saying BTC can be used as capital, not just as a store of value.
Strategy Chief Financial Officer Andrew Kang
- Based on the current Bitcoin market price of approximately $60,000, Startegy's Bitcoin portfolio is currently about $13.3 billion underwater on paper.
- As of press time, Strategy holds around 847,360 BTC, per data from BitcoinTreasuries.
The move comes just a few days after Grayscale research head Zach Pandl said his preferred outcome would be for Strategy to sell at least $3 billion worth of Bitcoin to cover nearly all cash obligations for the next two years, excluding one convertible note, which he said would probably restore market confidence.
While Strategy didn't go that far, it still did authorize $1.25 billion of reserve-building BTC monetization capacity and said its current $2.55 billion dollar reserve gives it about 17.4 months of coverage for expected preferred-stock dividends and interest expense.
- The company also raised the annual STRC dividend rate to 12% for semi-monthly periods with record dates on or after July 1.
- Strategy said it wants STRC to trade over time near $99 to $100, close to its stated amount, but said there is no guarantee that will happen.