Strategy (MSTR), for the first time last week, used its perpetual preferred stock as a primary vehicle to accumulate bitcoin, marking a potential change in how the company funds its bitcoin strategy.
The company announced on Monday that it purchased 22,337 BTC in the previous week, its fifth-largest acquisition on record.
The issuance through its STRC perpetual preferred shares was $1.18 billion, equivalent to approximately 16,800 BTC at an average price of $70,000, far exceeding the $396 million raised through its common stock-to-market (ATM) program, which had historically been the primary tool used to build its bitcoin holdings, which now total 761,068. BTC.
At STRC’s current 11.5% dividend rate, the $1.18 billion issuance implies approximately $135 million in annual dividend obligations. This has brought the company’s total annual dividend burden to more than $1 billion.
That said, the company has set aside approximately $2.25 billion in dollar reserves to fund these obligations, providing a cushion amid rising capital costs.
With the company’s common stock down more than 70%, it appears incentivized to support a higher share price without further dilution.
As a result, common equity can be used more selectively, primarily when the mNAV (multiple of net asset value) is significantly above 1 or when the company is looking to build up dollar reserves. In practice, this suggests less reliance on sales of common stock, while relying more on STRC, which prevents the issuance of new common stock.
Collectively, Strategy is increasingly funding bitcoin accumulation through its preferred capital base, with STRC now at the center of that approach.
Another dividend increase on the way?
STRC is showing early signs of price pressure. The preferred stock has spent three consecutive days trading below its face value of $100 following its ex-dividend date of March 15. With its one-month volume-weighted average price below par, the company could look to increase the dividend by another 25 basis points to support the price.
Read more: The math behind the strategy’s path to 1 million bitcoins by the end of 2026
