Article by: Oluwapelumi Adejumo
Compiled by Chopper, Foresight News
Strategy's latest round of Bitcoin sales brings its total Bitcoin disposals for 2026 to 5,258 BTC. This marks the highest annual selling volume since the company began its Bitcoin strategy in 2020. Strategy is reallocating funds to support its STRC preferred shares.
According to a filing by the U.S. Securities and Exchange Commission on August 3: Between July 27 and August 2, Strategy sold 1,638 bitcoins, generating $104.7 million in proceeds, and issued approximately 3.01 million shares of MSTR common stock, raising $290.6 million.
The nearly $395 million in raised funds was not used to purchase additional Bitcoin. Instead, Strategy used the funds to pay preferred stock dividends, repurchase STRC shares, and achieve its goal of expanding its U.S. dollar cash reserves to $4 billion.
Fund reallocation has also extended the company's pause in Bitcoin purchases to six weeks, the longest buying hiatus since 2024.
How will the strategy utilize the funds raised? Source: PurdyCapital
STRC continues to trade at a discount, forcing Strategy to reallocate capital.
The most immediate reason for delaying additional Bitcoin purchases is STRC, a floating-rate preferred stock that the company aims to establish as a sustainable funding channel to finance its Bitcoin treasury.
When STRC trades close to its $100 par value, Strategy can issue new shares near par and flexibly allocate the proceeds to its balance sheet, including the purchase of Bitcoin.
Once the stock trades at a prolonged discount, this financing channel will become ineffective: new share issuances would either have to lower the offering price or further increase the dividend yield to attract investors.
Although the Strategy can adjust its dividend policy to support the stock price, STRC has remained below par value since May. In response, the company has increased its annualized dividend to 12% and initiated share repurchases in the secondary market.
Last week, Strategy used $52.3 million from Bitcoin sales and $28.9 million from MSTR stock issuance, totaling $81.2 million, to repurchase 912,143 shares of STRC.
In the previous week, the company completed a $25 million share repurchase, acquiring 288,930 shares at an average price of $86.53.
During the Q2 earnings call, Phong Le, President and CEO of Strategy, stated that repurchasing STRC below par value allows the company to settle future dividend obligations at a discount, while increasing demand and helping push the stock price back toward its $100 par value.
Since the buyback program launched in July, Strategy has collectively invested approximately $106.2 million to repurchase STRC. The company still has $893.8 million remaining under its preferred stock buyback authorization, and the full $1 billion authorization for common stock repurchases of MSTR remains unused.
The company aims to bring STRC back to par value by September, with future buyback pacing dependent on stock price performance and market liquidity.
If the target is achieved, this important financing channel will be restored. As of July 26, 2026, Strategy has raised a total of $7.53 billion through various capital instruments, with preferred stock continuing to gain increasing weight in the balance sheet financing structure.
$4 billion in reserves to secure preferred share redemptions
Simultaneously, use the proceeds from this common stock offering to rapidly expand cash reserves for paying preferred stock dividends and debt interest.
Of the $290.6 million raised through MSTR's secondary offering, $250 million was allocated to the U.S. dollar reserve, and the remaining $11.7 million was retained as working capital.
As of the end of June, this reserve stood at $2.55 billion and was increased to $3.75 billion on July 26 through a common stock offering; after this round of funding, the $4 billion target has been officially achieved.
When updating the capital framework in June, Strategy estimated that the annual combined expense for preferred stock dividends and debt interest would be approximately $1.76 billion. At this expense level, the $4 billion reserve would cover payout requirements for approximately 27 months.
Without further approval from the board of directors, these funds may be used solely to pay dividends on preferred shares and interest on existing debt.
Reserve funds mitigate a key risk: the company does not need to sell assets or issue additional securities to meet short-term debt and interest obligations during unfavorable market conditions. Even if the price of Bitcoin declines or the capital market financing environment deteriorates, preferred shareholders are protected by a dedicated cash reserve.
But this safety net was largely achieved at the expense of diluting common shareholders' equity.
Last week, Strategy issued 3.01 million additional shares of MSTR common stock without purchasing any bitcoin; during the same period, the company’s bitcoin treasury decreased by 1,638 BTC, resulting in a lower bitcoin holding per diluted share.
Long-term Bitcoin bear Peter Schiff commented that a series of transactions indicate Strategy is increasingly relying on selling Bitcoin and issuing more MSTR to prioritize the interests of preferred shareholders.
The impact is clearly reflected in the company's bitcoins per share metric: since the beginning of this year, the increase in bitcoins per share of MSTR has slowed to just 3.5%, down from 13.3% at the end of May. So far this quarter, the metric has even declined by -4.6%.
Bitcoin key metrics from Strategy, data source: Strategy official
The strategy defines BTC yield as the percentage change in Bitcoin holdings per diluted share; the increase in BTC holdings converts this percentage into an estimated number of Bitcoins.
The company notes that the above two metrics are not equivalent to shareholder returns, revenue, or cash flow, nor do they indicate the company's ability to meet its debt obligations.
Cash reserves enhance Strategy’s ability to pay preferred shares and debt, but financing pressure shifts more toward MSTR common shareholders. Common shareholders’ returns are highly dependent on the speed of Bitcoin accumulation outpacing equity dilution.
Bitcoin becomes a常态化 liquidity source
This year, the strategy has involved significant ongoing sales of Bitcoin, signaling that Bitcoin has transitioned into an operational source of liquidity for the securities business.
In fact, the company sold 32 bitcoins in late May, 1,363 bitcoins on June 29 and 30, 2,225 bitcoins in the first five days of July, and another 1,638 bitcoins last week.
Strategy: Bitcoin Historical Buy and Sell Records, Data Source: ZeroHedge
Bitcoin analyst Will Clemente said this series of transactions clearly demonstrates how Strategy balances the interests of three groups: Bitcoin holders, MSTR common shareholders, and preferred stock investors. He noted that the sale indicates management’s willingness to reallocate funds within the balance sheet to prevent any single security from burdening the overall financing structure.
The Strategy formally establishes this flexibility through the "BTC Liquidity Plan," which authorizes the company to sell Bitcoin, increasing reserves by up to $1.25 billion. Funds may be used to pay preferred dividends, service debt interest, or repurchase preferred or common shares. Any sales exceeding these purposes or the stated limit require additional board approval.
Michael Saylor, Executive Chairman of the company, refuted external claims that the plan contradicts the commitment to "hold Bitcoin permanently." He stated: "The Strategy announced the BTC monetization plan 31 days before the Q2 earnings release, on June 29—not after incurring losses. We never implemented a 'never sell' policy. This plan does not mandate the sale of any Bitcoin, and over the long term, we still expect to continue net buying Bitcoin."
Strategy remains the publicly traded company with the largest Bitcoin holdings, owning 842,138 Bitcoin, approximately 4% of Bitcoin’s total supply cap of 21 million.
The total cost of this holding is $63.51 billion, with an average cost basis of $75,419. At the time of writing, the price of Bitcoin is approximately $62,633, giving the treasury a total market value of about $52.7 billion, representing an unrealized loss of approximately $10.8 billion compared to the total purchase cost.
Unrealized losses mean that the cost of subsequent realization will rise further. If Bitcoin continues to be sold below the average cost line, losses will be realized, and the Bitcoin reserve supporting the large common and preferred share systems and ongoing dividend obligations will continue to shrink.
Therefore, Saylor’s expectation of achieving long-term net purchases of Bitcoin increasingly depends on one thing: restoring STRC to its par value so the company can resume smooth financing without continuously diluting MSTR shareholders’ equity or depleting its Bitcoin reserves.