Strategy (formerly MicroStrategy) has unveiled a new capital plan dubbed the "Digital Credit Capital Framework," authorizing the sale of up to $1.25 billion in Bitcoin. Proceeds will be used to bolster cash reserves, pay preferred dividends, cover debt costs, and fund share repurchases. The annual dividend rate on STRC preferred shares has been raised from 11.5% to 12%.
Framework Details: Dividend Hike and Buyback Programs
The board has approved separate buyback programs for both preferred securities and Class A MSTR shares. CEO Michael Saylor noted that combining existing cash reserves with the potential $1.25 billion from Bitcoin conversion would give the company roughly $3.8 billion to fund dividend payments over an estimated 26 months. "We are taking a more flexible approach to capital allocation, balancing shareholder returns with the long-term value of our Bitcoin holdings," Saylor said. He also emphasized disciplined use of MSTR issuances, particularly when the stock trades at or near 1x modified net asset value (mNAV).
Cash Reserves: $2.55B Cover 17 Months of Obligations
Strategy reported cash reserves of $2.55 billion, sufficient to cover approximately 17 months of preferred share dividends and interest payments. Under the new policy, these reserves are dedicated exclusively to those payments, and the company will maintain a minimum reserve covering at least 12 months of obligations unless otherwise decided by the board. Saylor stressed that the $2.55 billion buffer extends to 26 months when combined with the Bitcoin sale plan, reducing liquidity risk amid market volatility.
Market Reaction: MSTR Down 50% YTD but Rebounds 5.5% Pre-Market
MSTR shares have lost roughly half their value since the start of the year, reflecting investor concerns over the company's heavily leveraged Bitcoin strategy. Last week, Grayscale's head of research Zach Pandl argued Strategy might need to sell $3 billion in Bitcoin to meet cash obligations. Following the announcement, however, MSTR rose more than 5.5% in Nasdaq pre-market trading on Monday, signaling cautious optimism. STRC preferred shares closed Friday at $71.25, a 28.75% discount to face value, but the higher dividend yield could narrow that gap.
Bitcoin Holdings Unchanged: 847,363 BTC, No New Purchases
Strategy confirmed it added no Bitcoin in the week through Sunday, maintaining total holdings of 847,363 BTC. Cumulative outlay stands at $64.1 billion, with an average purchase price of $75,651. At current prices around $60,018, the position is underwater. In June, the company net added 3,625 BTC — buying 3,657 BTC early in the month while selling 32 BTC. Additionally, it generated net income of roughly $1.15 billion by selling 12.67 million MSTR shares, reflecting active liquidity management while preserving long-term Bitcoin exposure.