Strategy Announces Authorization to Sell Up to $1.25 Billion in Bitcoin

Curry, Shenchao TechFlow

Shenchao summary:

Strategy, which holds 847,000 bitcoins, launched the "Digital Credit Capital Framework" on June 29, completely rewriting its previous four-year script of buying only. The new framework authorizes the sale of bitcoins to raise up to $1.25 billion, establishes a $2.55 billion cash reserve, increases the STRC dividend yield to 12%, and authorizes $1 billion each for repurchasing its own securities. This comes against the backdrop of MSTR plunging 36% over eight days, STRC preferred shares falling about 24% below par value, and the annualized dividend obligation quadrupling to $1.2 billion in one year. For holders, this is a "hemostasis plan"—but whether it succeeds depends on the price of bitcoin.

Strategy (formerly MicroStrategy) has officially acknowledged that the flywheel of indefinitely buying Bitcoin through preferred stock issuance has run its course.

On June 29, the world’s largest corporate Bitcoin holder announced the launch of the Digital Credit Capital Framework, a comprehensive set of cash reserves, buyback, and coin-selling mechanisms designed to stabilize its nearly out-of-control capital structure. The framework comprises five components: a USD reserve policy, an amended STRC dividend policy, a Digital Credit Securities buyback program, an A-class common stock buyback program, and a Bitcoin monetization plan.

The most striking point is: the company’s board has authorized the sale of Bitcoin to raise up to $1.25 billion for replenishing cash reserves, paying dividends and interest on preferred shares, or repurchasing its own securities. For a company that enshrined “never sell Bitcoin” in its core beliefs, this effectively establishes an official institutional pathway for selling Bitcoin.

The wording used by founder Michael Saylor in his statement has changed from the past. He stated that Bitcoin remains the company’s “primary treasury asset,” but immediately acknowledged: “Digital credit requires liquidity, discipline, and active capital management.”

Simply holding coins is no longer enough to cover the $1.2 billion annual dividend bill.

To understand this framework, first recognize how passive the Strategy currently is.

The company also announced an increase of 50 basis points in the annualized dividend rate of its Series A Variable Rate Perpetual Preferred Stock (STRC), from approximately 11.5% to 12.00%, effective for record dates on or after July 1. On the surface, this appears to enhance returns for investors, but in reality, it is a response to market pressure—STRC’s price has fallen to approximately $75 to $76, trading at a discount of about 24% below its $100 par value, hitting a record low.

STRC falling below par has exposed the core weakness of Strategy’s financing model. This preferred stock was originally the company’s “money printer”: continuously issuing new shares at or above par value to raise funds for purchasing Bitcoin. Once the price trades at a deep discount, new preferred shares can no longer be sold at attractive terms, causing the entire financing cycle to stall. In a report on June 23, Julio Moreno, Head of Research at CryptoQuant, calculated that Strategy’s annual dividend obligation has surged from approximately $300 million at the start of the year to about $1.2 billion—a fourfold increase in one year—while the dividend coverage period has plummeted from over seven years to just around 14 months. He directly recommended that the company suspend Bitcoin purchases and rebuild its cash reserves to approximately $2.8 billion.

For preferred shareholders, a 12% coupon sounds attractive—but only if the company can afford to pay it. The new framework requires USD reserves to cover at least 12 months of preferred dividend and interest obligations, turning the question of “whether payments can be made on time” into a hard constraint.

The strategy's cash reserves are growing at a visibly rapid pace, in complete contrast to its previous direction.

According to the company’s 8-K filing, as of June 28, the USD reserve balance was $2.55 billion, including expected cash proceeds from the pending settlement of A-class common stock ATM offerings. This represents a significant increase from $1.4 billion on June 21 and from $1.44 billion at the time of establishment in early December 2025. Where did the money come from? The answer is selling its own stock, not buying crypto.

Operations over the past three weeks have shown signs of a shift. During the week of June 22, the company purchased only 520 bitcoins for approximately $34.9 million—one-third of the previous week’s activity—while selling 2.71 million shares of MSTR common stock to raise $335.5 million, but allocated less than 11% of those proceeds to bitcoin, directing the remainder entirely into cash reserves.

Cointelegraph reported on June 29 that Strategy sold $1.2 billion worth of MSTR shares last week and made no Bitcoin purchases. If accurate, this figure suggests an increased pace of selling shares to raise cash (note: the weekly sale volume of $1.2 billion significantly exceeds previously disclosed weekly figures; verify against the company’s latest filings before publication). The company currently holds 847,363 bitcoins, with a weighted average cost of approximately $75,651 per bitcoin.

The cost of shifting to a "cash hoarding" strategy is dilution. Issuing new shares when MSTR’s stock price falls below its net Bitcoin per share value reduces the amount of Bitcoin attributable to each share. MSTR has this week dropped to approximately $82, nearing its two-year low of $81.81; the premium that powered this virtuous cycle no longer exists.

The framework also includes two additional buyback "blades": the Digital Credit Securities Buyback Program and the Class A Common Stock Buyback Program, each with an authorized maximum of $1 billion.

The logic is straightforward. Both STRC preferred shares and MSTR common shares are trading at deep discounts. By using cash (or proceeds from coin sales) to repurchase shares at these low levels, the company can theoretically narrow the discount and support the price. Bitcoin critic Peter Schiff has repeatedly posted on X over the past few days, arguing that Saylor’s best move would be to sell bitcoins to repurchase shares and reduce the discount.

The Strategy has now incorporated this recommendation into its official framework, but Schiff also warned that forcing coin sales could backfire and crash Bitcoin, plunging the entire structure into a death spiral.

Whether the buyback will be effective depends on how much cash the company has. For investors holding MSTR or preferred shares, the $1 billion authorization is merely a ceiling—not an indication that the full amount will be executed. The actual pace of purchases will depend on future disclosures.

This framework was hastily rolled out under multiple pressures; financial numbers alone are not enough.

On June 25, Rosen Law Firm disclosed that it is investigating Strategy and Saylor for potentially issuing materially misleading information to investors regarding their Bitcoin holdings, covering all five securities: MSTR, STRF, STRC, STRK, and STRD. The investigation is still in its early stages and no formal charges have been filed, but it coincides with a period of sustained price declines.

The liability side is also under pressure.

According to multiple media reports, Strategy has accumulated liabilities of approximately $8.2 billion on its balance sheet, and its cash reserves have declined by about 38% since 2026. The company also conducted a debt repurchase in May. With Bitcoin currently trading at around $60,000, it has fully fallen below the cost basis of all of Strategy’s purchase batches from 2024 to 2026, resulting in unrealized losses ranging between $10.6 billion and $14 billion (figures vary across sources).

For investors currently holding back, the most critical metric to monitor is the discount of MSTR’s stock price relative to its net Bitcoin per share. If the discount becomes excessively deep and persists, the ATM share issuance engine will shut down—that is precisely the outcome this framework aims to avoid, though it may not be entirely preventable.