Analysis: Strategy last week increased Bitcoin holdings for the first time, primarily using preferred shares as the financing tool.

According to Mars Finance, market sources indicate that Strategy last week used perpetual preferred stock as the primary tool to increase Bitcoin holdings for the first time, signaling a potential shift in its financing model. The company announced on Monday that it purchased 22,337 Bitcoins, marking the fifth-largest acquisition in history. Of this, $1.18 billion was financed through STRC perpetual preferred stock, approximately 16,800 Bitcoins (based on an average price of $70,000), far exceeding the $396 million raised through its common stock ATM plan. The ATM plan has been the main method for accumulating Bitcoin holdings, with total holdings now reaching 761,068 BTC. Based on the current 11.5% dividend rate for STRC, issuing $1.18 billion results in an annual dividend obligation of about $135 million, bringing the company’s total annual dividend burden to over $1 billion. The company has reserved approximately $2.25 billion to cover these obligations, providing a buffer amid rising financing costs. Since the common stock has fallen over 70%, the company prefers to support the stock price without further dilution of shares, thus opting to use common stock more selectively in the future—mainly when net asset value multiples are significantly above 1 or when dollar reserves need to be built—relying more on STRC financing to avoid issuing new common shares. Since the ex-dividend date on March 15, STRC has fallen below its face value of $100 for three consecutive days. If the volume-weighted average price continues to stay below face value for a month, the company may consider increasing the dividend by 25 basis points to support the price.