Arca exec: Strategy’s $15B prefs may force BTC sales

Jeff Dorman, chief investment officer at Arca, warned in a social media post that Strategy’s roughly $15 billion in preferred stock and about $1.5 billion in annual dividend obligations could force the company to sell Bitcoin to cover payments.

Dorman said the preferred-stock financing model was built on the assumption that Bitcoin would continue to climb and cover future dividend commitments. He noted Strategy has issued five separate preferred classes – STRK, STRF, STRD, STRC and STRE – each with different dividend terms and seniority within the capital structure.

In his post, Dorman wrote the position “has gotten out of hand” and that the structure narrows possible outcomes to selling Bitcoin to pay dividends or stopping dividend payments. He also questioned the company’s repurchase of 2029 notes given the ongoing preferred-stock obligations.

Strategy chief executive Phong Le acknowledged the company may sell some Bitcoin holdings at some point. In an interview he stated, “We’ll likely sell Bitcoin at some point in time, but we will be net increasing our Bitcoin and, more importantly, increasing our Bitcoin per share.” Executive chairman Michael Saylor had earlier raised the possibility of sales.

A prediction market tracking the chance Strategy will sell any Bitcoin shows elevated odds across 2026, with roughly a 90% probability by Dec. 31, 2026, about 71% by June 30, 2026, and 18% by May 31, 2026.

Strategy has continued to add to its Bitcoin holdings this year, purchasing about 170,000 BTC and bringing its total to roughly 843,738 BTC. The company’s aggregate purchase cost is about $63.87 billion and the average purchase price is near $75,700 per Bitcoin. Bitcoin traded lower year-to-date, down roughly 16% to about $73,737 at the time of the remarks, while Bitcoin whale balances turned negative.

Preferred shares carry fixed dividend commitments that create cash needs regardless of asset performance. For Strategy those obligations total roughly $1.5 billion annually, according to Dorman. If Bitcoin’s market value falls or remains volatile for an extended period, selling coins to meet dividend payments would reduce the company’s crypto holdings and could affect its stated goal of increasing Bitcoin per share.

Strategy has funded Bitcoin purchases through equity offerings, bond issuances and preferred stock sales. Dorman said recent equity raises eased near-term default concerns but questioned the long-term sustainability of relying on rising Bitcoin prices to meet fixed payouts.

Investors and analysts are monitoring Strategy’s cash flows and future capital decisions as the company balances dividend obligations on preferred shares with its stated strategy to grow its Bitcoin holdings per share.