Michael Saylor promised investors that MicroStrategy would stay a net buyer of Bitcoin. Last week it sold 1,638 coins in seven days, burning through a third of what it had offloaded all year.
The trigger was simple cash flow math. Preferred shareholders get a fixed 12% dividend every quarter, and the bill hit $400.7 million in Q2, up from $49.1 million a year earlier. The company needed liquidity fast.
Strategy's Bitcoin reserve now sits at 842,138 coins as of August 2. That is roughly 1,600 fewer than it held in May, despite adding just 37 coins between late May and late July. Over ten weeks, the company bought essentially nothing.
Saylor got ahead of questions on August 1, stating that the company never promised to never sell. He pointed out the buying program does not require holding every coin and that MicroStrategy expects to remain a net buyer over time. The filings tell a different story: buying has frozen.
The sale itself was not a panic move but a calculated trade. Strategy sold Bitcoin at $63,957 per coin while its average cost basis sits at $75,419, locking in roughly $11,500 losses on each coin sold. They funneled half the proceeds into buying back their own preferred shares, the debt-like instruments paying 12% annually.
Here is where the arbitrage kicks in. Strategy paid $89.02 per share when each is supposed to be worth $100. An 11% discount on your own liabilities beats holding coins at a loss. Every share retired eliminates future dividend obligations permanently.
The company also sold 3,011,361 ordinary shares for $290.6 million, though a $1 billion buyback authorization remains unused. Annual dividend and interest costs now run roughly $1.76 billion, and that figure only grows if preferred share prices stay below par.
MicroStrategy is caught between two forces. Saylor built the narrative around Bitcoin accumulation at scale, but the company's capital structure means dividends always come first. Coins can wait.
This article is for information purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.
