Strategy's week comes down to two figures. On one side, 267 bitcoins bought for $22.1 million between October 12 and 18, according to Journal du Coin. On the other, $193.1 million spent buying back its STRC preferred shares, nearly nine times the amount put into bitcoin. The first figure makes the headlines every Monday. The second says more about how the company works.

267 bitcoins, a drop in the reserve

According to the regulatory filing cited by Journal du Coin, Strategy paid an average of $82,900 per bitcoin, fees included. Its holdings now stand at 848,517 BTC, for a cumulative cost of $64.02 billion and an average cost basis of $75,446. These holdings represent about 4.04% of the maximum supply of 21 million bitcoins.

The week's purchase is modest at this scale: it amounts to 0.03% of the stock the company already holds. The accumulation continues, but in small steps.

Shares sold to buy bitcoin

The financing follows the usual pattern. Strategy sold 140,872 MSTR common shares under its at-the-market issuance program, which brought in $22 million net of commissions. The remaining $100,000 was drawn from its available cash.

The program retains $18.79 billion of issuance capacity. Journal du Coin points out that this is an authorization to sell additional securities, not cash already sitting in the accounts. And each new issuance increases the number of shares outstanding.

STRC buybacks absorb most of the cash

Over the same week, Strategy bought back 1,938,780 STRC preferred shares for $193.1 million. These securities carry a variable dividend. Buying them back ties up cash immediately, but it can also reduce the distributions owed on the securities outstanding. According to Journal du Coin, it therefore does not amount to a loss equivalent to the sum spent.

The company also paid $45.5 million in dividends across all of its preferred shares. It keeps two separate pools: a reserve earmarked for dividends and interest, which stood at $4.83 billion as of October 18, and cash for more general purposes, of $447.3 million.

The board of directors has also raised the buyback authorization for its digital credit securities from $2 billion to $3 billion. After the transactions already completed, $1.16 billion remains available under this envelope.

What this trade-off says about the bitcoin treasury model

The reported facts outline a multi-tiered model. Bitcoin purchases depend on selling new common shares. Preferred shares, for their part, create dividend obligations that the company covers through a dedicated reserve, and that it can lighten by buying back securities.

Reading these figures, the constraint lies less in buying bitcoin than in managing what the company owes its securities holders. Most of the week's cash went to these obligations; bitcoin, for its part, was financed almost entirely by issuing shares. The issuance program's $18.79 billion capacity does not guarantee cash: it assumes buyers will take up these securities, at the cost of dilution for existing shareholders. Journal du Coin sums up the week this way: the results above all highlight the weight of share buybacks and dividends in the use of cash.

Strategy's place in the financial markets raises other questions, such as the MSCI index rule targeting Strategy and Metaplanet. And the model of a listed company holding a cryptocurrency on its balance sheet is spreading beyond bitcoin, as shown by Evernorth and its XRP treasury.

Saylor and the bitcoin-backed currency project

Michael Saylor continues to champion the idea of a dollar-pegged digital currency backed by bitcoin, with an envisaged yield of 6 to 8%. This is a statement of intent: Journal du Coin notes that this presentation describes an ambition, without establishing the launch of a product or guaranteeing its return.

Sources

  • Journal du Coin: « Strategy accumule encore du bitcoin, mais ses liquidités vont surtout aux rachats d’actions »