Strategy sells bitcoin to pay dividends and sits on an 8.6 billion dollar paper loss

Strategy, the group known as MicroStrategy until its renaming, sold 1,638 bitcoin for 104.7 million dollars between 27 July and 2 August. Of those proceeds 52.4 million dollars went into dividends on preferred shares and 52.3 million dollars into buying back its own preferred paper.

Holdings therefore fell to 842,138 bitcoin. At a price of around 65,200 dollars that corresponds to a market value of around 54.9 billion dollars. The purchase price was 63.51 billion dollars, which gives a paper loss of about 8.6 billion dollars.

The average purchase price is around 75,651 dollars per bitcoin and therefore clearly above the current market price.

The short version

• Strategy sold 1,638 bitcoin for 104.7 million dollars between 27 July and 2 August to pay dividends and buy back preferred paper.
• Holdings fell to 842,138 bitcoin, and at a purchase price of 63.51 billion dollars that gives a paper loss of about 8.6 billion dollars.
• Obligations on the preferred paper come to more than 1.5 billion dollars a year.

A break with its own principle

The most remarkable part is not the size of the sales but their principle. Founder Michael Saylor had held the position for years that he would never sell. The first sale since 2022 took place in 2026 and covered only 32 bitcoin for around 2.5 million dollars.

The amount was insignificant, the signal was not. Bitcoin has therefore moved from an untouchable reserve to a financing instrument.

Saylor explained that at an analyst conference by saying that the company would sell part of it in order to pay dividends and to show the market its own success.

The change of course was formalised in a new financing framework. It provides for a dollar reserve of 2.55 billion dollars, buybacks of its own common shares of up to one billion dollars and permission to sell up to 20,800 bitcoin or around 2.5 percent of holdings.

The premium has disappeared

The business model rested for years on a simple calculation. The share traded above the value of the bitcoin held. The company issued new shares and used them to buy more bitcoin than the shares were worth. For existing shareholders the bitcoin per share therefore rose.

That calculation only works with a premium. Management has named a threshold for it. If the ratio of market value to bitcoin value is above 1.22, shares are issued. If it falls below that, bitcoin is sold instead to repay debt or buy back shares.

That value most recently stood at around 1.07. At times the share even traded below the value of its bitcoin holdings.

More than 1.5 billion dollars of dividends a year

Obligations on the preferred paper come to more than 1.5 billion dollars a year. The dividend rate on the floating rate paper was raised from 11.5 to 12 percent.

In parallel a buyback of that paper below par is running, which lowers the future burden.

The company has committed to holding 2.55 billion dollars in liquid funds and has secured the right to sell bitcoin worth 1.25 billion dollars. Together that gives a buffer of 3.8 billion dollars, which by its own account covers several years of obligations without the bitcoin price having to rise.

The background is an investigation begun in June by an American law firm, which raised the question of whether the payments remain serviceable at a persistently low bitcoin price.

Debt stands at around 6.75 to 8.2 billion dollars, of which a considerable part falls on convertible bonds secured against bitcoin.

Price targets between 176 and 395 dollars

The share last closed at 100.01 dollars. Analyst views diverge widely. Targets named are 395 dollars at TD Cowen and 260 dollars at Citi, while other houses sit at 176 to 228 dollars and Mizuho cut to 213 dollars.

That spread reflects the real difficulty. The value of the company depends almost entirely on the bitcoin price and on whether the market is willing to pay a premium for the wrapper.

In the first quarter the group reported a net loss of 12.54 billion dollars, mainly from unrealised price losses.

Management has shifted its own yardstick accordingly. It is no longer total bitcoin holdings that count as the measure of success but bitcoin per share.

Frequently asked questions

Why is Strategy selling bitcoin now

Founder Michael Saylor had held the position for years that he would never sell. He explained the change by saying the company would sell part of it in order to pay dividends and to show the market its own success. The new financing framework allows the sale of up to 20,800 bitcoin.

Why does the business model no longer work

It rested on the share trading above the value of the bitcoin held. If the ratio of market value to bitcoin value is above 1.22, shares are issued. That value most recently stood at around 1.07, and at times the share even traded below the value of its holdings.

How large are the running obligations

Obligations on the preferred paper come to more than 1.5 billion dollars a year. The dividend rate on the floating rate paper was raised from 11.5 to 12 percent. Debt stands at around 6.75 to 8.2 billion dollars.

This analysis is for information only and is not investment advice.