Strategy built the biggest corporate bitcoin pile on earth — more than $50 billion worth, roughly 4% of all the bitcoin that will ever exist. It paid with stock, debt, and preferred shares. Now the machine is running backward.
Preferred shares — a kind of stock that promises a set dividend, paid ahead of regular shareholders — were the fuel. Sell new paper at a premium, buy more coin, repeat.
The pitch leaned on mNAV, a yardstick the company invented: its own market value divided by the value of its bitcoin. Above 1, the machine hums.
Under the waterline
Last month, mNAV slipped below 1 by the company’s own count. Even that number flatters it.
Strategy counts its $6.75 billion of debt and $15.46 billion of preferreds at face value. The market prices that debt about 7% lower, and the preferreds at a 28% discount. Marked honestly, mNAV was closer to 0.89.
Bitcoin itself trades near $63,900 — about half its October peak above $126,000. The common stock is down 75% in a year.
“Never sell,” sold
The company’s creed was to hold on for dear life and never sell. Then May brought the first-ever sale: 32 bitcoins, $2.5 million. Small enough to call symbolic.
On June 29, the board authorized selling up to $1.25 billion of bitcoin to fund share buybacks, interest payments, and preferred dividends. In the same breath, it raised the dividend on its STRC “Stretch” preferred to 12%.
Monday’s disclosure: 3,588 bitcoins sold last week for $216 million. The cash buffer stands at $2.55 billion — about 17 months of interest and dividends before more crypto must be sold.
So follow the loop. The company sells its only asset to pay the dividend on the paper it issued to buy that asset. That is not a yield. That is a liquidation with a coupon attached.
The 12% warning label
Retirees are the natural target for a 12% “income” pitch, because 12% sounds like a pension and reads like a promise. Now you can see the machinery behind the number.
A company that could borrow at normal rates would. One that must offer 12%, from a treasury made of one volatile asset at half its peak, is telling you exactly how risky its promise is.
The market agrees. Those preferreds change hands at a 28% discount to face value — the bond market’s way of saying it does not expect to be repaid in full.
Compare the honest alternative. Short-term Treasurys pay north of 4%, backed by the taxing power of the world’s wealthiest economy. The gap between 12% and 4% is not free money. It is the market’s exact price tag on the risk you are being asked to carry.
Notice the speed, too. “Never sell” became 32 coins, then $216 million a week, in about sixty days. If any yield is triple the Treasury rate, ask what must be sold to pay you. If the answer is the company’s only asset, you have your answer.