Strategy paid $100M extra to buy back the bitcoin it sold

Strategy has spent recent weeks rebuying 5,553 of the BTC it sold over the summer. After selling low in the summer and re-buying high this autumn, the opportunity cost of its roundtrip trade exceeds $100 million.

Despite years of promises that he’d never sell, Michael Saylor’s company sold 6,948 BTC between May and August for an average of $62,150 apiece, then repurchased 5,553 coins at an average $80,207.

In other words, Strategy ended up with the same 5,553 coins it started with, but spent $445.4 million to replace those it sold for $345.1 million.

Its rebuy was 29% more expensive, foregoing a $100.2 million investment gain for being out of the market during a BTC rally.

In addition to that realized opportunity cost, the pain for shareholders goes even deeper.

The point of the sale was essentially for media purposes — not even because the company was short on cash. Indeed, on a May 5 call with analysts, Saylor said the company would sell BTC “just to inoculate the market” and send the message for news publications that it had done so. 

He told Fortune, “the skeptics and the short-sellers don’t recognize that we’re just selling a BTC derivative, and we have the option to sell the BTC.” 

Saylor and CEO Phong Le appeared on numerous TV interviews and podcasts, explaining that Strategy’s initial BTC sale was for messaging purposes. 

Official SEC filings for the sales claimed that proceeds funded dividends, despite the company holding plenty of cash to cover those dividends without selling BTC.

Read more: Every time Michael Saylor said he’d never sell bitcoin

Strategy’s first re-buy this year arrived during the week ending August 30, when Strategy bought 4,603 coins at $80,318 each for $369.7 million.

It was the company’s first purchase in 10 weeks, funded with newly issued stock that diluted common shareholders. 

Last week, it repurchased another 950 BTC at $79,670 apiece, this time with cash instead of outright stock dilution. 

Every coin came back about $18,000 more expensive than its average sale price.

Worse, the replacement is incomplete. Strategy has paid $445 million to reacquire 5,553 coins, but 1,363 coins remain missing. Today, Strategy holds 846,000 BTC, but it held 847,363 as recently on June 21. 

Rebuying those missing 1,363 coins would require another $100 million at current BTC prices.

Unfortunately, nobody at Strategy is apologizing for any of this.

Saylor has been unapologetic, and Le posted on the day of Strategy’s fourth sale of the year, “This is the Digital Credit Capital Framework at work.” 

He’s since told Bloomberg that it was “the right trade at the time to sell BTC.” 

“It’s a two-way strategy,” he added, unfazed by criticism. “There will be times when it makes sense to sell bitcoin.”

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