- Strategy added 13,927 Bitcoin to its reserves, valued at $1 billion.
- The company now has 780,897 BTC in its treasury, nearly rivaling BlackRock’s 788,927 BTC for its spot Bitcoin ETF.
- Executive Chairman Michael Saylor assured investors that the business’s growing value will enable it to continue paying dividends.
Strategy (formerly MicroStrategy), a Bitcoin (BTC) development and business intelligence company, has announced topping up its digital asset treasury (DAT) to the tune of $1 billion. Meanwhile, the company’s Executive Chairman, Michael Saylor, assured investors that the business can cover its dividend payments.
Strategy’s Latest Bitcoin Purchase
According to Strategy’s disclosure on Monday, it secured 13,927 BTC from April 6 to 12, totaling $1 billion. It translates to an average of $71,902 per BTC, as Bitcoin’s price ranged between $67K and $73K during the period.
The move increases Strategy’s total haul to 780,897 BTC, accounting for 3.9% of the 20.01 million BTC in circulation. It’s worth noting that the figures are already very close to the 788,927 BTC investment giant BlackRock maintains to back its iShares Bitcoin Trust (IBIT) exchange-traded fund (ETF).
So far, Strategy has converted $59.02 billion into Bitcoin. It comes at an average purchase price of $75,577 BTC.
Purchase Purely Powered by STRC Stock
Many considered Strategy’s latest acquisition impressive, as it didn’t sell any of its MSTR Class A Common Stock. Instead, it funded the transactions with the entire $1.0013 billion in proceeds from its Variable Rate Series A Perpetual Stretch (STRC) Preferred Stock offering, consisting of roughly 10.028 million shares.
Currently, the company has more than 21.642 billion STRC shares available for issuance. On the other hand, MSTR has over 27.096 billion shares left for issuance.
Despite Bitcoin presently trading below Strategy’s average purchase price, it reflects a premium Market-to-Bitcoin Net Asset Value (mNAV) of 1.11. It means the market still values the company above the liquid value of its BTC holdings.
Capability to Pay Dividends
Most criticisms from Strategy’s detractors focus on its ability to continue paying dividends amid the ongoing deep market corrections. Some forecasts even claim that BTC has yet to reach its bottom this cycle, with $30,000 to $40,000 per coin as the most common estimate.
To ensure the business has sufficient funds to cover its dividends, it has set aside a cash reserve of $2.25 billion. At this rate, the amount is enough to pay 21.8 months of dividends to investors. It comes on top of the 44.9 years of coverage the institution has if it were to tap its BTC holdings to pay dividends.
Furthermore, Saylor recently revealed that Strategy’s BTC breakeven Annual Recurring Revenue (ARR) stands at approximately 2.05%. Hence, if Bitcoin grows faster than that rate, the company can cover its dividends indefinitely without issuing new shares.
