The company, previously known as MicroStrategy, has announced that it raised over $700 million through a recent preferred stock offering aimed at acquiring additional Bitcoin.
On March 21, the firm officially reported the sale of 8.5 million shares of its Series A Perpetual STRF Preferred Stock, each priced at $85 and offering a 10% annual dividend.
Initially, the firm aimed to raise $500 million with the STRF but exceeded expectations, bringing in $711 million—more than a 40% increase over its target.
This new offering does not permit conversion into common shares, in contrast to the previous STRK offering, which featured an 8% yield and conversion rights.
Jeff Park, who leads alpha strategies at Bitwise, noted that the interest in the STRF was driven more by fixed income considerations than by the volatility associated with the company’s stock.
He commented that the more attractive yield and improved pricing terms contributed to a stronger reception, which led to STRF raising more capital than STRK.
Can the company maintain its Bitcoin-focused strategy?
While this capital infusion enhances the company’s purchasing ability, concerns are mounting about its capacity to handle long-term obligations.
The firm holds over 499,000 BTC—valued at more than $40 billion—and has structured its corporate identity around aggressive Bitcoin accumulation. However, the choice to refrain from selling its holdings has left the company with limited liquidity.
Bitwise has highlighted that this situation has resulted in declining liquidity ratios, with the cash ratio dropping from 2.10 in 2019 to only 0.11 in 2024.
Nonetheless, Bitwise asserts that the risk of bankruptcy remains minimal. Even in a dramatic scenario where Bitcoin drops to $30,000 by September 2027, the company would only need to liquidate about 7.3% of its Bitcoin to satisfy a $1.1 billion bond obligation.
Bitwise has also recommended new strategies to bolster the company’s cash flow. One suggestion involves lending half of its Bitcoin at a 4% annual return, which could produce sufficient income to cover interest and dividend payments.
An alternative strategy includes using covered call options, a method already implemented by firms such as Japan’s Metaplanet.
Lastly, Bitwise concluded that the recent adoption of FASB regulations would enable the firm to report its Bitcoin holdings at their fair market value, which would:
“Allow the company to present its Bitcoin assets more accurately, resulting in a higher reported book value and more transparent financial statements. Consequently, the volatility in the company’s earnings will decrease, better aligning its financial disclosures with its long-term Bitcoin strategy.”
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