Strategy Sells 1,638 Bitcoin Below Its Cost Basis to Fund Dividends and STRC Buybacks

Strategy sold 1,638 BTC for $104.7 million in the week to August 2, reducing its holdings to 842,138 BTC, according to a Form 8-K filed Monday. The coins went at an average net price of $63,957, about $11,462 below the $75,419 average the company paid to build the position.

About $52.4 million of the sale funded dividends on Strategy’s preferred stock and $52.3 million went toward repurchasing STRC, its variable-rate perpetual preferred. The company bought back 912,143 STRC shares for $81.2 million in total, and separately raised $290.6 million in net proceeds by issuing 3,011,361 MSTR common shares, with $250 million of that directed to a USD Reserve that now stands at $4 billion. Strategy’s board held STRC’s annual dividend rate at 12% and declared two semi-monthly payments of $0.50 per share.

Strategy is now selling bitcoin at a loss and issuing common stock to defend a preferred security that was built to be its bitcoin-buying engine, which means the flywheel is running in reverse. STRC was most recently trading just over $92 below its $100 par value at an annualized variable rate of 12%.

Strategy has not reported a bitcoin purchase in more than five weeks. A capital framework adopted in June permits up to $1.25 billion of bitcoin sales to meet obligations and has signaled plans to raise that cap to $5 billion. Strategy still holds just over 4% of bitcoin’s 21 million maximum supply.

Strategy reported a $8.22 billion net loss for the second quarter on July 30, driven by an $8.32 billion unrealized markdown on its bitcoin under fair-value accounting.

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