Strategy: Selling BTC and issuing MSTR shares to secure $400 million in cash and repurchase STRCs

Strategy disclosed its fundraising and operational activities for the week of July 27th to August 2nd through a filing submitted to the U.S. Securities and Exchange Commission (SEC) on August 3rd. During this period, the company sold 1,638 Bitcoins, generating $147.7 million, and issued approximately 3.01 million shares of MSTR common stock, raising $290.6 million, for a total of approximately $395 million. However, none of this capital was used for the purchase of new Bitcoins. This marks the sixth consecutive week that Strategy has suspended its purchases of new BTC, which is the longest such period since 2024. The core of the capital deployment was the normalization of STRC preferred shares. Since May, the STRC shares have consistently traded below their par value ($100), and if this trend continues, it will weaken the channel for raising capital through new issuance. Last week, Strategy used $52.3 million from the Bitcoin sale and $28.9 million from the MSTR issuance to repurchase 912,143 shares of STRC at an average price of $8.12 million. The company also repurchased 28,930 shares at an average price of $86.53, for a total of $25 million the previous week. Since the start of the program in July, the total amount of STRC repurchased has reached approximately $162 million. The remaining authorized amount for STRC repurchases is $893.8 million, and the $1 billion authorized limit for repurchasing MSTR common stock remains unused. The company aims to restore the STRC share price to its par value by September. At the same time, Strategy has reached its target of $4 billion in cash reserves. Of the $290.6 million raised from the MSTR issuance, $250 million was allocated to the reserves, with $11.7 million held in cash. The reserves, which stood at $25.5 billion at the end of June, increased to $37.5 billion by July 26th, and this increase has allowed the company to reach its $4 billion target. These reserves are sufficient to cover approximately $1.76 billion in annual preferred dividends and debt interest for about 27 months and can only be used for preferred dividend and debt interest payments without separate board approval. However, this process has resulted in both dilution of MSTR common stock and a decrease in BTC holdings. Bitcoin analyst Will Clemente commented that this transaction more clearly demonstrates how Strategy is balancing the interests of Bitcoin holders, common stock shareholders, and preferred share investors. On the other hand, Bitcoin skeptic Peter Schiff criticized the transaction, stating that it shows Strategy is increasingly relying on Bitcoin sales and MSTR dilution to protect preferred share investors. Strategy's BTC yield year-to-date is 3.5%, a significant drop from 13.3% at the end of May. The BTC yield for the quarter is -4.6%, and the BTC gain indicator has decreased by approximately 40,000 BTC, which is about $2.4 billion at current prices. Currently, Strategy holds 842,138 Bitcoins, with an average acquisition cost of $75,419 per Bitcoin, for a total acquisition cost of $63.51 billion. At the time of writing, the Bitcoin price is approximately $62,633, meaning the market value of the company's holdings (approximately $52.7 billion) is about $10.8 billion lower than the acquisition cost.