🧠 Food for thought

Implications, context, and why it matters.

Strategy uses more than software cash to keep buying bitcoin

• Strategy funds bitcoin buys with cash from its software business plus an active capital markets effort.
• It brings in money through common stock, convertible debt, and several types of preferred stock.
• One offering was STRC, a perpetual preferred stock with a 9.00% annual dividend rate. The company said it planned to use the net proceeds for general corporate purposes, including buying bitcoin 1.
• The fundraising plan runs large, with a goal of up to US$84 billion from equity and fixed-income sales over several years 2.

Shareholder dilution can build during a long downturn

• Strategy has faced sizable unrealized losses, yet many investors see a forced bitcoin sale as unlikely.
• Its convertible notes are described as not backed by bitcoin, which lowers the chance of sales tied to collateral or margin calls after a price drop 3.
• A bigger concern for shareholders is the slow squeeze described as “death by dilution” in an extended bear market 4.
• If the stock premium fades, Strategy may need to sell new shares at weak prices to refinance billion-dollar debt. That could shrink the bitcoin tied to each existing share 4.