The world’s largest corporate Bitcoin holder said it has accumulated enough cash reserves to cover more than two years of dividend payments, addressing investor concerns about its growing reliance on preferred securities.
Strategy (MSTR), the biggest corporate holder of Bitcoin, posted an $8.2 billion net loss for the second quarter after a decline in BTC prices reduced the value of its cryptocurrency holdings.
The majority of the quarterly loss came from an $8.32 billion unrealized loss recorded on its Bitcoin holdings due to fair-value accounting adjustments.
By July 26, Strategy held 843,775 BTC, a 25% increase from the beginning of the year. Based on current market prices, the company’s Bitcoin portfolio is worth about $54.8 billion, compared with the $63.7 billion total cost of acquisition.
The results arrived as investors continued to question the sustainability of Strategy’s increasingly complex financing model, which combines multiple preferred stock classes, common equity, and convertible debt.
So far this year, the company has raised $17.06 billion through at-the-market equity offerings, bought back $1.5 billion in convertible notes at an 8% discount, and increased its U.S. dollar reserve to $3.75 billion. Strategy said the reserve can support more than two years of preferred dividend payments and interest expenses.
CFO Andrew Kang said the company’s USD reserve of $3.75 billion is enough to cover existing preferred dividend obligations and interest payments for over 2.1 years.
Strategy also sold roughly $218.4 million worth of Bitcoin through its new BTC Monetization Program to strengthen its cash position and help finance preferred stock dividends. The move represented a departure from the company’s previous strategy of accumulating Bitcoin without selling its holdings.
Executive Chairman Michael Saylor said Strategy remains focused on expanding its “Digital Credit” initiative despite weaker Bitcoin market conditions.
Saylor said the company is continuing to develop its business model and build Digital Credit into a new asset category despite reduced investor confidence and softer Bitcoin sentiment.
The company also launched a $1 billion share repurchase program for its MSTR common stock, though it has not executed any buybacks under the plan so far. Separately, Strategy repurchased around $25 million of its STRC preferred shares below their stated value and said it plans to continue buying the securities as long as they trade below par.
