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(Bloomberg) -- Michael Saylor’s Strategy Inc. bought $2.54 billion in Bitcoin over the previous seven days, marking the digital asset treasury company’s largest acquisition of the original cryptocurrency since November 2024.
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The purchases made in the week ended April 19 were primarily funded through the sale of $2.18 billion of STRC, or Stretch, perpetual preferred shares, according to a US Securities and Exchange Commission filing Monday. The remainder was financed through the sale of common shares.
Strategy has benefitted from the recent three-week long rally in Bitcoin, the longest winning streak for the digital currency since July. The rising cryptocurrency price helps to bolster demand for both the common and preferred shares. The stock rallied almost 30% last week as Bitcoin touched a two-month high.
Saylor, who originated the Bitcoin treasury strategy in 2020, debuted the variable rate preferred issue last year as the company co-founder and chairman sought to diversify funding sources. Strategy has raised tens of billions of dollars from selling common shares over the last several years to buy the digital currency. Strategy owns about $61 billion in Bitcoin.
The pivot took place as concern over dilution among common shareholders increased during the plunge in the value of crypto assets since late last year. The company had been able to leverage the premium between its share prices and Bitcoin to raise capital from equity sales without much dilution during crypto bull markets. That premium has evaporated amid the sharp decline in Bitcoin since the token hit a record high in October.
While preferred shares are not dilutive like the common shares, they incur hefty dividend payments - 11.5% for the STRC securities - increasing the debt burden of the company. Strategy raised $2.25 billion last year as a cash reserve when Bitcoin saw a sharp slump in part to mitigate the risks of a liquidity crunch. Bitcoin doesn’t generate cash flow or offer a return.
On Friday, Strategy proposed to pay a semi-monthly dividend on STRC, instead of a monthly one. The change is intended to stabilize the price of the preferred shares so they trade at par, allowing Strategy to issue new shares without the heavy discounts often required during secondary market offerings. Strategy has been marketing the hybrid securities - which offer a junk bond equivalent yield - primarily to retail buyers as a low-volatility investment.
The cryptocurrency was trading around $75,300 on Monday. Bitcoin briefly topped $78,000 over the weekend, a level last seen at the beginning of February. For much of this year, it has been stuck in the $65,000 to $75,000 range, with brief surges showing a lack of conviction from traders in the options markets, which still display a defensive posture.
Shares of Strategy were little changed at about $166 on Monday. The stock is down about 48% in the past year, while Bitcoin is 11% lower during the same period.
