#Bitlayer #BTCOvertakesAmazon #BTCHashratePeak $BTC $ETH $XRP

News

Michael Saylor's Strategy buys another 155 BTC for $18 million approaching 3% of total Bitcoin supply

The Block

Quick Look

Strategy bought another 155 BTC for around $18 million at an average price of $116,401 per Bitcoin - bringing its total holdings to 628,946 BTC.

Recent acquisitions were financed through proceeds from the sale of its permanent preferred shares Strife, STRF, and its permanent preferred shares Stretch, STRC.

Strategy (formerly known as MicroStrategy), specializing in Bitcoin treasury, acquired an additional 155 shares.

Bitcoin +1.12%

Bitcoin was sold for about $18 million at an average price of $116,401 per Bitcoin from August 4 to August 10, according to an 8-K filing with the SEC on Monday.

Exactly five years after its first Bitcoin purchase in 2020, Strategy now owns a total of 628,946 Bitcoins - worth about $76 billion - purchased at an average price of $73,288 per Bitcoin for a total cost of approximately $46.1 billion, including fees and expenses, according to Michael Saylor, co-founder and CEO of the company. This represents nearly 3% of the total Bitcoin supply of 21 million, translating to about $30 billion in paper gains.

Recent acquisitions were made using proceeds from the sale of Strife's permanent preferred shares (STRF) and Stretch's permanent preferred shares (STRC). Last week, Strategy sold 115,169 shares of STRF for about $13.6 million. As of August 10, STRF shares worth $1.87 billion remain available for issuance and sale under its IPO program, according to the company. The remainder of the Bitcoins was acquired using the proceeds from STRC's previously completed IPO valued at $4.2 billion.

STRF shares are non-convertible, with a cumulative yield of 10%, making them the most conservative among Strategy's preferred stocks. STRC is a new preferred stock with a variable cumulative yield starting from 9% annually, paid monthly, with adjustable interest rates to keep it trading close to its par value of $100.

The STRK and STRF permanent preferred stock programs, worth $21 billion, $2.1 billion, and $4.2 billion, are added to the company's "42/42" plan, which targets raising a total capital of $84 billion in equity and convertible bond offerings for Bitcoin acquisitions by 2027 - a plan that has been increased from its initial "21/21" plan worth $42 billion after exhausting the equity side.

Change Strategy

Saylor reiterated the possibility of submitting another Bitcoin acquisition request soon, sharing an update on Strategy's Bitcoin acquisition tracker on Sunday, stating: "If you don't stop buying Bitcoin, you won't stop making money."

Bitcoin Acquisition Strategy. Image: Strategy.

However, no shares of its Class A common stock, MSTR, were sold last week, with $17 billion remaining under the ATM program. In its second-quarter financial results, Strategy committed to not issuing common stock if its market value to net asset value (mNAV) ratio is below 2.5x, except for specific purposes such as repaying interest on debt obligations and funding preferred dividend distributions. Strategy's mNAV ratio currently stands at approximately 1.5x.

See cryptocurrency indicators

Strategy reported a record net income of $10 billion in the second quarter. Operating income was approximately $14.03 billion, up 7,106% year-over-year, primarily due to $14 billion in unrealized gains from its Bitcoin holdings. This profit follows the implementation of a new accounting rule that allows the company to apply fair value accounting to its digital assets.

Wall Street analysts praised Strategy's issuance model based on its mNAV and capital accuracy, as many firms raised price targets and reaffirmed their bullish ratings for MSTR.

Corporate Race to Accumulate Bitcoin

Strategy announced no Bitcoin purchases last week on Monday, keeping its total holdings at 628,791 Bitcoins. The pace of Bitcoin purchases by Strategy has generally slowed in recent weeks as it shifted its focus from ordinary common stock trading to its permanent preferred shares to finance Bitcoin acquisitions.

According to Bitcoin Treasuries data, there are now 151 public companies that have adopted one of the Bitcoin acquisition models. The remaining ten companies include MARA, Tether-backed Twenty One, Bitcoin Standard Treasury Company backed by Adam Back and Cantor Fitzgerald, Riot Platforms, Trump Media & Technology Group, Metaplanet, Galaxy Digital, CleanSpark, and Coinbase, with holdings of 50,639 BTC, 43,514 BTC, 30,021 BTC, 19,239 BTC, 18,430 BTC, 17,595 BTC, 17,102 BTC, 12,703 BTC, and 11,776 BTC, respectively.

Strategy's market capitalization of $112 billion is still trading at a significant premium to its Bitcoin net asset value, raising concerns among some investors about the company's premium valuation against net asset value and its increasing Bitcoin acquisition programs in general. However, some analysts believe that with Strategy's relatively low debt levels and no payments due until 2028, the company's leverage remains within reasonable limits.

Saylor remains confident in Strategy's ability to withstand. In an interview with the Financial Times earlier this year, he stated that Strategy's capital structure is designed to endure a 90% drop in Bitcoin's value lasting four to five years, thanks to its mix of equity, convertible debt, and preferred financial instruments - while acknowledging that shareholders will continue to "suffer" in such a scenario.

MSTR closed down 1.7% on Friday at $395.13, according to The Block's Strategy price page, in a week that saw a 6% rise in Bitcoin's price, nearing its all-time highs. MSTR is currently up 4.8% in pre-market trading on Monday, according to TradingView, and 31.7% year-to-date, compared to 24.4% for Bitcoin.