Michael Saylor’s company has just resumed its bitcoin acquisitions, but at a price that raises questions. Strategy just purchased 4,603 BTC at 80,318 each for $369.7 million after about two months of absence. However, the company had sold several thousand bitcoins a few weeks earlier at a significantly lower price. Thus, this return to the market does not constitute a simple resumption of accumulation, but it provides information on the financial arrangements which now mark the bitcoin strategy of this group, between capital raising, liquidity management and repurchase of securities.
In brief
- Strategy resumes its bitcoin purchases after almost two months of interruption.
- 4,603 BTC were acquired for $369.7 million, at $80,318 per unit.
- The company is buying back bitcoin at around 29% more than in its previous sales.
- Strategy now holds 845,050 BTC and $6.71 billion in dollar assets.
A first purchase of bitcoins in almost two months
While the group’s president had rekindled speculation, Strategy bought 4630 BTC between August 24 and 30. This transaction involves its reserves at 845050 BTCacquired for a cumulative sum of $63.73 billion, or an average cost of $75,412 per BTC. Michael Saylor sums up this scenario:
Strategy acquired 4603 BTC for $370 million, increased its USD treasury by $29 million, and repurchased $152 million worth of STRC shares. As of August 30, we hold 845,050 bitcoins and $6.71 billion in USD assets, bringing our net leverage to 0.0%. $MSTR.
To finance its operations, Strategy sold 4,531,421 MSTR shares through its ATM (At The Market) program. The company then raised $602.8 million net of commissions. All of these assets have not been changed into bitcoins. Indeed, part was dedicated to the STRC and another to the dollar treasury.
The $602.8 million raised was distributed between four uses:
- $369.7 million for the purchase of 4603 BTC;
- $151.8 million for the repurchase of STRC shares;
- $50.7 million for STRC dividends;
- $30 million transferred to USD Cash account.
Bitcoins repurchased significantly more expensive than they were sold
The course of the last few months provides another reading of the acquisition. Strategy sold 6,948 BTC between May and August for nearly $432.5 million, at a price close to $62,250 per unit. The company is now back in the market at $80,318 per BTC on average, almost 29% higher than its previous sales. Under the terms of this succession of sales and purchases, Strategy owns 2345 BTC less than before the sequence started and keeps around $63 million difference in cash.
The BTC sales met a financing need. STRC had fallen below its par value of $100 in June, shutting down a funding channel once used to acquire bitcoin. Michael Saylor’s company then established its “Digital Credit Capital Framework”. This program authorizes up to $1.25 billion in BTC disposal to cover dividends and repurchase preferred shares at a discount. The current return to acquisitions occurs after a sufficient rise in MSTR for the issuance of shares to once again become the least expensive financing option.
Strategy recomposes its financial balances around bitcoin
New operations on the financial structure of the company accompany this resumption of acquisitions. During the relevant week, Strategy repurchased 1,557,177 STRC shares for an amount of $151.8 million. There is still $364.8 million available from the $1 billion digital credit repurchase authorization. A separate envelope of one billion dollars, dedicated to the buyout of MSTR, remains entirely unused.
The balance sheet in dollars has also consolidated. As of August 30, Strategy had $5.10 billion in USD Reserve and $1.61 billion in unrestricted USD Cash, bringing its dollar assets to $6.71 billion. According to the group, this posture brings back its “net leverage” at 0.0%. These statistics place the new acquisition of bitcoins in a strategy where the accumulation of BTC now coexists with the liquidity management of the company’s various financial tools.
With 845,050 BTC in its portfolio, Strategy remains fully exposed to bitcoin. This return to acquisitions attests that accumulation continues if its financing conditions allow it. The recent scenario also reveals a less linear reality. Thus, the company can sell BTC, consolidate its reserves in dollars, act on its securities then return to bitcoin at a higher price. The extension of this policy may therefore depend on the conditions under which Strategy will raise new capital.
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