From 'Never Sell Bitcoin' to Active Management: How is Strategy Coping with $1.26 Billion Annual Dividend Pressure?

Bitcoin treasury giant Strategy has launched a selling plan, with cross-exchange trading potentially being key to maximizing value.

Written by: Cooper Duschang

Compiled by: AididiaoJP, Foresight News

Key Points

• Between June 29 and July 5, Strategy sold 3,588 bitcoins to pay preferred stock dividends and replenish its USD reserves. This marks only the third and fourth sales since it began acquiring bitcoins in August 2020.
• Strategy's STRC preferred stock structure could generate up to $1.26 billion in annual dividend costs. Currently, the STRC price is about 10% below par value, and the dividend rate has been raised to 12%, which will further increase dividend costs.
• Strategy can improve the actual transaction prices of buying and selling bitcoins by executing trades across multiple exchanges and markets. The Binance-USDT market has leading order book depth, accommodating approximately 2,900 bitcoins within a 10% range around the mid-price.

Introduction

MicroStrategy was founded in 1989 as an enterprise software company. In 2020, the company realized the risk of rapid inflation devaluation of cash reserves and decided to invest cash into bitcoin as a hedge.

On July 6, 2026, Strategy disclosed in an 8-K filing the sale of bitcoins, marking only the third and fourth sales since 2020. The company's complex capital structure requires ongoing dividend payments to preferred shareholders, management of convertible debt, while continuing to accumulate bitcoins. This article will delve into the role of STRC preferred stock in the company's capital structure, the reasons for selling bitcoins, and how to maximize bitcoin value through optimized trade execution.

Strategy's Capital Operation Strategy

In 2025, MicroStrategy officially rebranded to Strategy. Since its initial investment, the company has accumulated 843,775 bitcoins through debt and equity financing. As these bitcoins were primarily acquired through financing, the company effectively provides investors with leveraged exposure to bitcoin and pioneered the model of large-scale acquisitions of a single cryptocurrency asset, now referred to as Digital Asset Treasuries (DATs).

Layered Capital Structure

Strategy has issued various structured products to finance bitcoin purchases. Convertible bonds allow the company to raise funds without immediately diluting common stock. These bonds possess both fixed income characteristics and equity conversion potential, akin to a call option—if the company's stock price exceeds the exercise price, bondholders can convert to stock for profit. Only the bonds maturing in 2032 have a coupon rate exceeding 1% (at 2.25%), while the other five bonds have rates below 1% or zero, allowing the company to keep costs low and focus on accumulating bitcoins.

In October 2024, the company launched the “21/21 Plan,” aiming to finance bitcoin purchases through the issuance of $21 billion in debt and $21 billion in equity. As financing progressed, the company successively introduced four types of USD-denominated perpetual preferred stocks: STRF, STRC, STRK, and STRD.

STRC preferred stock (commonly known as “Stretch”) has garnered attention due to its variable dividend mechanism. It offers semi-monthly dividends, with the dividend rate adjusted monthly, aiming to keep the stock price fluctuating around the $100 par value.

The specific adjustment rules are:

• When the stock price is below $95, it is recommended to raise the dividend rate by 50 basis points;
• When the stock price is between $95 and $99, raise by 25 basis points;
• When the stock price is above $101, lower by 25 basis points.

At the end of June, STRC briefly dropped to about $73 (approximately 27% below par value), and the annualized dividend rate was subsequently raised to 12%. Based on the current approximately 105 million shares, this will result in an annual dividend cost of $1.26 billion for the company. If the remaining issuance capacity is fully utilized (corresponding to a scenario of 275 million shares), the cost would be even higher. STRC also faces competition from Strive's SATA preferred stock, which currently has a dividend rate of 13%, potentially forcing Strategy to further increase dividends to attract investors.

In bankruptcy liquidation, convertible bonds and preferred stocks have priority over assets, thus carrying lower risk and relatively limited returns. Common stock (MSTR), due to the company's leveraged exposure to bitcoin, has the greatest potential for appreciation but also the highest risk, sitting at the bottom of the capital structure.

The company closely tracks the “Bitcoin per Share” (BPS) metric, which assumes the number of bitcoins per share (in satoshis) after all convertible bonds, preferred stocks, options, etc., are exercised. However, the correlation between MSTR stock price and bitcoin price is only 0.09, indicating a weak correlation, suggesting that other factors are driving the stock price.

One key factor is operational risk. The company must permanently pay preferred stock dividends and repay the principal and interest on convertible bonds. However, holding bitcoin itself does not generate stable income, and the company's software business generated only $124 million in revenue in the first quarter of 2026. How can the company continue to meet the growing demands of creditors while focusing on accumulating bitcoins?

The Shift from 'Never Sell Bitcoin'

In February 2025, Strategy CEO Michael Saylor emphasized on social media the mantra of “never sell your bitcoin.” Prior to this, the company had only sold 704 bitcoins once in December 2022 to offset capital gains. From May 26 to 31, 2026, the company announced the sale of 32 bitcoins; from June 29 to July 5, it sold another 3,588 bitcoins. These sales accounted for only 0.42% of the total holdings, generating approximately $218.5 million in revenue.

Selling bitcoins is not the norm for the company; why break the precedent this time? The proceeds were primarily used to pay preferred stock dividends and replenish USD reserves (a cash buffer set up by the company to cover dividends). The small scale of the sales does not imply that the company is in distress. Notably, in June, the company also purchased three batches of bitcoins, totaling 3,657 bitcoins.

Bitcoin Monetization and Reserve Management

The USD reserve was established in December 2025, specifically for paying preferred stock dividends, primarily supplemented by issuing common stock through an ATM program. As of June 28, the company estimates that the $2.55 billion reserve can cover all preferred stock dividends and bond interest for approximately 17.4 months.

Last week, the company officially approved the “Bitcoin Monetization Plan,” authorizing the sale of up to $1.25 billion in bitcoins to replenish reserves. This indicates that the company is shifting towards more proactive balance sheet management, combining bitcoin sales with equity issuance.

In June 2026, Saylor pointed out at the Goldman Sachs Digital Assets Conference in London that the role of bitcoin as collateral in creating “digital credit” is becoming increasingly important. He mentioned that utilizing bitcoin as collateral has financed the acquisition of 175,000 bitcoins during market downturns. The company is exploring new ways to use bitcoin as collateral or resources for dividend payments.

Optimizing Trade Execution: Cross-Platform Sales Can Reduce Losses

If the company continues to sell bitcoins to pay dividends, adopting a gradual and decentralized approach while executing trades across multiple exchanges can significantly improve actual transaction prices. The bitcoin monetization plan allows for the sale of up to $1.25 billion in bitcoins, which, at the current price of approximately $63,500, corresponds to about 20,000 bitcoins, accounting for about 2% of current holdings.

Cross-Exchange Trading Reduces Price Impact

Different exchanges have varying mid-prices and order book depths, providing opportunities for arbitrage and indicating that decentralized trading can reduce the impact of a single large order on prices.

Around the time the company might sell 32 bitcoins (average transaction price $77,135), we compared the four most liquid bitcoin order books (1% depth around the mid-price). The Binance-USDT order book leads with approximately 2,900 bitcoins, double that of the second-place Coinbase. To push the price from the mid-price up by 0.1% to 1%, Binance-USDT requires about 300 bitcoins, while OKEX-USDT only needs 40.

The mid-prices across exchanges also vary: the USDT quoted market is around $77,188, while the USD and USDC quoted markets are approximately $77,112 and $77,115, respectively. The prices of bitcoin itself and the quoted currencies will affect the final transaction. Unifying liquidity across platforms and selecting order books with the least price volatility can help achieve better prices for large sales like the recent 3,588 bitcoins.

Conclusion

Strategy's creditor obligations are continuously growing, and bitcoin sales are becoming one of the regular means to meet these obligations. Just for STRC alone, the annual dividend cost could reach as high as $3 billion. Maximizing the value of bitcoin sales will help reduce the number of bitcoins that must be sold to pay dividends.

In the short term, USD reserves, the bitcoin monetization plan, and more proactive balance sheet management provide ample buffers for the company. In the long term, developing bitcoin collateral and other financial products around bitcoin holdings can alleviate the pressure of large-scale sales or dilution of shareholder equity. Therefore, the sustainability of Strategy's capital structure depends not only on the price performance of bitcoin itself but also on whether the financial markets supported by bitcoin can further mature.