MicroStrategy Plans Bitcoin Sale to Cover $1B Annual STRC Dividend
Strategy reported a $12.54 billion first-quarter loss and is considering Bitcoin sales to fund its perpetual preferred STRC dividend after obligations hit nearly $1 billion annually. Chairman Michael Saylor called the move an “inoculation” to stabilize STRC’s 11.50% yield against rising dividend commitments.
1. First-Quarter Loss and Dividend Strategy
Strategy posted a $12.54 billion net loss in Q1 and signaled it will sell Bitcoin to fund a planned cash dividend on its perpetual preferred shares. Michael Saylor described the sale as an “inoculation” to normalize Bitcoin disposals and reassure investors of STRC’s yield stability.
2. STRC Dividend Obligations
STRC carries an 11.50% annual dividend paid monthly, translating to nearly $1 billion in cash obligations based on current issuance. Continued share issuance boosts this liability, potentially straining the company’s capacity to stack more dividend claims.
3. Cash and Bitcoin Reserves
The firm holds $2.25 billion in USD cash and a $66.6 billion corporate Bitcoin treasury, which management cites as sufficient to cover dividend obligations despite growth in STRC shares. CFO Andrew Kang affirmed that stable cash reserves and ongoing capital raises underpin the dividend strategy.
4. Market Implications and Risks
By selling Bitcoin now, Strategy aims to mitigate market shock from future disposals but risks dampening Bitcoin exposure that drives its valuation. If STRC demand slows, the company may face funding pressures that could halt its aggressive Bitcoin accumulation model.