MicroStrategy to Resume Bitcoin Buys Only After STRC Hits $100
MicroStrategy will resume Bitcoin purchases only once its STRC preferred shares return to $100 par; the company paused buys in late June after raising $467 million and building a $3 billion cash reserve.
MicroStrategy will restart Bitcoin buying only after its Stretch (STRC) preferred shares trade back at their $100 par value, CEO Phong Le said on Tuesday. The company halted net purchases in late June while it raised $467 million in common equity and increased its U.S. dollar reserve to $3 billion.
Le said the plan is to restore STRC to par so the company can issue more preferred stock and use the proceeds to buy Bitcoin. “When Stretch gets back to par, we’ll issue more. We’ll buy Bitcoin,” he said, and added the firm may continue to increase its dollar reserve in the meantime.
STRC has traded below the $100 par since mid-May. The preferred shares fell to about $75 at a low point and recently traded near $89, levels that make issuing new preferreds unattractive. The pause in buying began as management shifted focus to shoring up liquidity.
The $3 billion USD Reserve was built in part with the $467 million raised through a common-stock offering. Company officials say that cash level is sufficient to cover roughly two years of dividend payments.
MicroStrategy holds more than 840,000 Bitcoin, equal to about 4% of the 21 million maximum supply. Le noted recent sales of roughly $216 million and said those transactions did not move Bitcoin’s market given typical daily trading volumes of $30 billion to $40 billion.
Management has revised its capital framework to give the company flexibility to sell Bitcoin, repurchase securities and protect liquidity. That framework allowed leadership to pause purchases while preserving the company’s cash runway.
Asked about downside scenarios, the CEO warned the firm would need to reassess risks tied to its debt if Bitcoin fell into an $8,000 to $10,000 range. He referenced prior market downturns the company has faced and said he expects a future rally in the asset.
Until STRC returns to par, MicroStrategy will weigh its U.S. dollar liquidity, the economics of issuing preferred shares and the state of the Bitcoin market before resuming net purchases.
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