STRC Fuels MicroStrategy’s Mid-Month Bitcoin Purchases

MicroStrategy used proceeds from its STRC perpetual preferred stock to issue shares through an at-the-market program and fund the purchase of more than 5,000 Bitcoin this week. The activity followed a recurring mid-month pattern tied to the STRC ex-dividend record date on the 15th.

The mechanics are straightforward: investors must hold STRC by the 15th to qualify for month-end dividends. Demand for the preferred tends to rise ahead of that cutoff, pushing the security toward its $100 par value. When STRC trades at or above par, MicroStrategy can sell new shares into the market and use the cash to add Bitcoin to its holdings.

Market and research data show STRC returned to par earlier this week, creating capacity for the latest issuance and the resulting Bitcoin purchase before the next ex-dividend deadline.

K33 Research has tracked the volume of Bitcoin acquired via STRC proceeds. The firm estimates MicroStrategy bought 4,467 Bitcoin in January, 22,131 in March and about 46,872 in April using that funding channel. Vetle Lunde, head of research at K33, described the setup as “a mechanical source of demand,” saying yield-seeking buyers lift STRC before the record date and allow the company to convert that demand into spot purchases.

MicroStrategy has proposed shifting STRC distributions from monthly to twice monthly. The company says more frequent payouts would shorten the time between dividend events and create additional occasions to raise capital through the preferred program.

The preferred stock carries a higher cost than the company’s earlier financing sources. STRC’s annualized yield has risen to about 11.5%, reflecting its subordinated position below senior debt and convertibles. MicroStrategy also holds roughly $8.2 billion of convertible debt principal, with repayments starting in September 2027, limiting cheaper borrowing options.

Delphi Digital estimates MicroStrategy’s common stock currently trades at about 1.24 times its enterprise-value-based net asset value. The firm also calculates that roughly 97% of every $1 billion raised through STRC can be deployed into Bitcoin at current prices, while each $1 billion of issuance creates about $115 million of annual dividend obligations. Delphi’s model projects Bitcoin-per-share growth from STRC funding could exceed 7% in the first year but fall to just over 3% by year three as the preferred base and dividend burden expand.

A separate research group modeled downside scenarios, noting that a sustained Bitcoin decline could reduce investor demand for STRC and force higher dividend yields to attract buyers. That pattern would raise MicroStrategy’s cash obligations at a time when its Bitcoin holdings are losing value. The group’s scenario analysis suggests the company’s roughly $2.5 billion in cash reserves could be depleted within 17 to 22 months under pessimistic conditions, potentially forcing asset sales to meet dividend payments.

MicroStrategy’s STRC program is subject to an authorization cap of about $28.3 billion. Once the company reaches that ceiling, the preferred route can no longer scale at the same pace while dividend obligations would remain. Delphi projects that hitting the cap could eventually push net Bitcoin-per-share growth into negative territory in some scenarios.

MicroStrategy’s president and CEO Phong Le wrote on X: “Bitcoin per share (BPS) is our True North. Every day, MicroStrategy uses multivariate models to optimize capital, equity, debt, and credit decisions to maximize annual BTC Yield (growth in BPS). YTD, we’ve achieved 9.4% BTC Yield and $5.0 billion in BTC Gain.”

For now, STRC continues to provide a predictable mid-month source of demand that the company has used to fund recent purchases. Analysts note the structure also creates recurring dividend obligations tied to each issuance and that those obligations rise as the preferred base grows, increasing the financing cost of future Bitcoin acquisitions.