Strategy (MSTR) Pauses Bitcoin Buying and Spends $205 Million on Preferred Stock

Bitcoin Magazine

Strategy (MSTR) Pauses Bitcoin Buying and Spends $205 Million on Preferred Stock

Strategy reported no bitcoin purchases or sales during the week of October 19 through 25. The company continues to hold 848,517 BTC, acquired for $64.02 billion at an average price of $75,446 per bitcoin. 

Its cash went toward repurchasing $204.9 million of STRC preferred stock, and the firm kept a $4.83 billion cash reserve, according to a company release. 

Michael Saylor’s company built its treasury into the largest corporate bitcoin holdings in the world through stock sales and convertible debt, using the proceeds to buy coins. That pattern has changed somewhat this year. The company has paused purchases several times and directed money toward buybacks of its preferred shares.

The company has had stints of pauses, from a week when the company halted its bitcoin buys to a stretch in which it sold bitcoin after five weeks without buying.

In September, the company repurchased $176 million of STRC in one week and expanded its digital credit securities repurchase program from $1 billion to $2 billion.

STRC is a preferred stock with a variable dividend, designed to trade near its $100 face value. When the shares fall below that level, as they have during recent market swings, buying them back shrinks the preferred claim. Retiring $100 of stated value for $86.52 cuts the claim by a larger amount than the cash spent, which lifts net bitcoin per share.

Bitcoin traded near $80,000 on Monday, October 26, after slipping below that level in early Asian hours. A weekend selloff pushed the price to the low $79,000’s, a level not seen in over a month.

Strategy’s average cost of $75,446 sits below that price, so the company’s holdings show a paper gain of around $3.9 billion. The $4.83 billion reserve covers preferred dividends and debt interest, according to company reporting. 

Strategy’s buyback capacity depends on preferred stock trading below par and on cash from common stock sales, a funding mix that has shifted toward stock sales this year. 

The company has offered no timetable for resuming bitcoin buys.

This post Strategy (MSTR) Pauses Bitcoin Buying and Spends $205 Million on Preferred Stock first appeared on Bitcoin Magazine and is written by Micah Zimmerman.