Strategy sketches pathway for up to $5B in Bitcoin sales to bolster reserves and fund buybacks

Strategy has laid out a capital management framework that could permit as much as $5 billion in Bitcoin sales, with proceeds potentially earmarked for cash reserves, dividend and interest obligations, and securities repurchases. Speaking on the company's Q2 earnings call, CEO Phong Le said sales would be considered only to meet defined capital needs. The company also said it has paused large Bitcoin purchases in recent weeks and has not added to its holdings since midMay. Investor's Business Daily reported that Le described three primary uses for potential Bitcoin-sale proceeds: building a U.S. dollar reserve of up to $1.25 billion; covering roughly $1.76 billion in annual preferred dividends and interest payments; and deploying up to $2 billion for buybacks of common stock and digital credit securities. Le said $5 billion reflects the current ceiling under existing programs, while founder Michael Saylor indicated the total could rise beyond that level if conditions require. Strategy has already sold about $218.4 million of Bitcoin this year to help fund preferred dividends, according to Investor's Business Daily. As of July 26, the company held 843,775 BTC acquired at an average purchase price of $75,476. Management also focused on its STRC preferred stock, reiterating an objective to return STRC to its $100 par value. STRC originally carried a 9% dividend, which Strategy raised over time to 12%. With STRC recently trading around 89.50, its effective dividend yield has risen to about 13.4%. To reinforce confidence in STRC, Strategy raised $3 billion through new MSTR share sales, and it has $975 million remaining under its preferred-share repurchase authorization. Saylor said additional capital could be deployed if current buyback efforts are not sufficient. Investor's Business Daily reported Strategy's reserves were about $58.5 billion at the time of the earnings call. Bitcoin accumulation remains on hold. Strategy stopped buying after STRC fell below par in midMay, and Saylor said the company will not issue additional STRC until the preferred returns to par. Strategy also revised its Bitcoin-per-share calculation last week; the updated approach compares the net value of Bitcoin holdings, after debt and preferred stock, against MSTR's fully diluted market value. Executives offered no indication that large-scale Bitcoin purchases will restart soon.