The world’s largest corporate Bitcoin holder said it has established a cash reserve that can cover more than two years of dividend payments as investors continue to examine its expanding preferred stock strategy.
Strategy (MSTR), the largest corporate Bitcoin holder globally, reported an $8.2 billion net loss in the second quarter after the drop in Bitcoin prices sharply reduced the value of its digital asset holdings.
The quarterly loss was primarily caused by an $8.32 billion unrealized decline in the value of its Bitcoin reserves under fair-value accounting standards.
As of July 26, Strategy’s Bitcoin holdings stood at 843,775 BTC, up 25% since the start of the year. At current market levels, the company’s Bitcoin stash is valued at roughly $54.8 billion, below its total purchase cost of $63.7 billion.
The earnings report came amid rising investor concerns about whether the company can maintain its complex capital structure, which includes several preferred stock classes, common shares, and convertible debt.
Strategy raised $17.06 billion through at-the-market stock sales this year, repurchased $1.5 billion worth of convertible notes at an 8% discount, and expanded its U.S. dollar reserve to $3.75 billion. The company said the reserve is enough to meet preferred dividend payments and interest obligations for more than two years.
CFO Andrew Kang said the company’s $3.75 billion cash reserve provides coverage for current preferred dividend commitments and interest expenses for approximately 2.1 years.
The firm also sold around $218.4 million worth of Bitcoin through its BTC Monetization Program, using the proceeds to strengthen liquidity and support preferred stock dividend payments. This marked a change from its previous policy of only accumulating Bitcoin and not selling its holdings.
Executive Chairman Michael Saylor said Strategy remains committed to expanding its “Digital Credit” business despite the recent decline in Bitcoin prices.
Saylor noted that while Bitcoin sentiment has weakened and market skepticism has increased, Strategy continues working to evolve its business model and establish Digital Credit as a new investment category.
Strategy additionally approved a $1 billion buyback program for its MSTR common shares, although it has yet to repurchase any stock under the initiative. The company also bought back about $25 million worth of STRC preferred shares at a discount and said it plans to continue purchasing them while they trade below their original value.
