MicroStrategy’s $2.5B Bitcoin Buy Backed by 11.5% Yield STRC Preferred Equity
MicroStrategy used 85% of proceeds from its new STRC preferred equity issue to purchase 34,164 Bitcoin valued at $2.5 billion, backing an 11.5% dividend with overcollateralised BTC holdings and $2.25 billion cash reserves. Meanwhile, Bitcoin’s tech-driven rebound has revived speculation of a $100,000 price target.
1. Tech-Driven Bitcoin Rally
Bitcoin recaptured momentum as a tech sector upswing fueled renewed talk of a $100,000 price target despite recent volatility.
2. STRC Preferred Equity Issue
MicroStrategy issued STRC preferred shares funding 85% of a 34,164-Bitcoin purchase worth $2.5 billion, establishing an 11.5% annual dividend backed solely by BTC holdings.
3. Dividend Suspension and Share Issuance Risk
Dividend payments can be suspended or adjusted at any time, and STRC share issuance halts if the price falls below $100, threatening the entire funding thesis.
4. Tax Treatment and Collateral Strength
STRC dividends qualify as return of capital, offering tax benefits for high-bracket investors, while $2.25 billion in cash reserves and overcollateralisation anchor STRC’s risk profile.