Strategy’s U.S. dollar cash reserve has climbed to $4.65 billion, up from $3.75 billion just two weeks earlier. Over the same period, the company has sold nearly 7,000 BTC since late June 2026, raising a basic question for the sector: should Bitcoin treasury companies hold larger dollar reserves, or is Strategy dealing with a balance-sheet problem that most peers do not share?
The piece was written by Allard Peng and translated by AIdidiaoJP for Foresight News.
Why Strategy is accumulating more dollars
The article frames Strategy, formerly MicroStrategy, as something closer to a digital credit issuance platform than a conventional software company. Its preferred securities are economically backed by a large Bitcoin-heavy balance sheet, but the obligations attached to those securities are fixed and dollar-denominated. Dividends must be paid in dollars on schedule regardless of where BTC trades.
That mismatch matters. Bitcoin does not generate cash flow, and the company’s software business, while still operating, does not produce enough cash to cover an increasingly large capital structure, according to the article.
Credit ratings add pressure
The article points to the traditional credit framework as a major reason cash has become more important for Strategy. In October 2025, S&P assigned the company a B- rating. The reasons cited were direct: excessive Bitcoin concentration, insufficient dollar liquidity, and extremely weak risk-adjusted capital.
Under the methodology described in the piece, Bitcoin is almost excluded from effective capital because of market volatility. In practical terms, even a very large BTC position does little to improve how the balance sheet is viewed by rating agencies.
That helps explain the cash buildup. More dollar liquidity can make Strategy’s preferred securities look safer to both investors and rating agencies, which can support demand and lower funding costs as the company keeps issuing what the article calls digital credit.
The hidden cost of holding cash
The article’s central argument is that cash carries a real economic cost. Capital sitting idle on the balance sheet is capital not earning the return available elsewhere. For an ordinary company, excess cash could be used for reinvestment, share buybacks, or dividends. For a Bitcoin treasury company, the obvious alternative is buying more BTC.
Each dollar held as cash, in that framing, is one less dollar allocated to Bitcoin and one more dollar exposed to a negative real return after inflation.
The article says Strategy is willing to accept that tradeoff because its model is tied to continuous credit issuance. It identifies three conditions behind that decision:
- Bitcoin dominates the balance sheet.
- Rating agencies heavily penalize Bitcoin exposure.
- Management intends to keep issuing digital credit at scale.
The argument is that Strategy needs a large dollar reserve because all three conditions are in place at once. Without that financing structure, the company would not need to hold this much cash.
How the hurdle rate rises
To show the drag mathematically, the article uses a simple example. If Strategy issues $100 of preferred equity with a 10% annual dividend, and it wants to reserve enough cash to cover three years of dividends, it must hold back $30. That leaves only $70 available to deploy into Bitcoin.
The annual dividend obligation is still $10. As a result, the $70 deployed into BTC must earn at least 14.29%, calculated as 10 ÷ 70 = 14.29%.
On that basis, a stated 10% cost of capital becomes a 14.29% hurdle rate on the capital actually invested. The article describes that as a 42.9% increase in the required return. Interest earned on cash can soften the number slightly, but it does not remove the structural drag.
The article then adds a second layer: volatility drag. Bitcoin can underperform that 14.29% hurdle in some years, yet the dividend obligation does not disappear, assuming no missed payments. That leaves the company using a volatile asset to support fixed payment commitments, which in turn raises the practical hurdle rate even higher.
The larger the required cash reserve, the smaller the share of each new dollar that can actually go into BTC. If Bitcoin’s long-run appreciation fails to stay above that higher hurdle, common shareholders absorb the cost.
Cash still has option value
The piece does not treat cash as useless. It says cash provides real option value in two cases:
- it can cover dividends and interest during sharp Bitcoin drawdowns, reducing the risk of forced BTC sales at low prices;
- it can be used for opportunistic repurchases when preferred securities trade well below book value.
The article cites a recent example. At the end of July, Strategy used $25 million to repurchase STRC with a book value of $28.89 million, a 13.47% discount. It later used $108.6 million from Bitcoin sales to buy back another 1.15 million STRC shares.
Repurchasing preferred securities below par, the article says, allows the company to extinguish more preferred claims and future dividend obligations with less cash. In that sense, it is accretive to Net Bitcoin Per Share.
Why most Bitcoin companies should not copy this approach
The article argues that most Bitcoin-related companies face a different problem set. Their cash needs should be tied to the actual operating business, not to an abstract reserve target. It also notes that even Strategy itself does not know exactly how much cash is required to secure a better rating or draw more credit investors into STRC.
For a company with real operating cash flow, the article says the relevant items are usually straightforward:
- payroll,
- taxes,
- debt repayment,
- supplier payments,
- near-term capital expenditures,
- and a reasonable buffer for swings in operating cash flow.
The size of that buffer depends on business stability. A profitable company with recurring revenue, low fixed costs, and predictable expenses can keep a smaller cushion. A cyclical business with heavy capital spending needs more liquidity.
In the article’s view, the only valid reason to increase reserves is that the business itself requires the liquidity. Wanting to see a larger cash balance is not enough.
Excess cash needs a defined purpose
Once operating needs and a prudent buffer are covered, any additional cash should have a clear economic use. Otherwise, it creates a large opportunity cost and dilutes shareholder returns.
The article lists three common uses for excess capital:
- buying back clearly undervalued shares,
- repaying expensive debt,
- or funding projects with a higher return profile.
For Bitcoin companies, it says the default high-return project is often straightforward: buy more Bitcoin.
The conclusion in the article
The article’s conclusion is that Strategy is an extreme outlier. Its cash reserve exists because the company has built a large digital credit issuance machine on top of a Bitcoin-based balance sheet, while credit rating agencies still treat a legal, liquid Bitcoin asset base as close to zero for capital purposes.
Without that liability structure, which is the case for almost every other Bitcoin-related company, there is little reason to accumulate dollars at scale beyond normal operations and a reasonable liquidity buffer.
In the article’s framing, every extra dollar held as cash is one less dollar used to buy Bitcoin. If one assumes Bitcoin appreciates over the long run, that means trading a certain negative real return for an uncertain sense of safety. The right balance between cash and BTC is not set by sentiment or imitation, but by a company’s own business model, capital structure, and actual cash flow requirements.