On March 18, Michael Saylor announced that MicroStrategy, now operating as Strategy (Nasdaq: MSTR; STRK), planned to issue 5 million shares of its Series A Perpetual Strife Preferred Stock (STRF) to raise $500 million in order to acquire additional Bitcoin.
Instead of granting voting rights like common stock, the STRF stock pays fixed dividends — in this case, 10% annually, with quarterly payments in cash. This model allows Strategy to raise capital without diluting voting power for common shareholders.
Strategy under the leadership of Saylor has been on a Bitcoin acquisition spree for years now and has invited criticism.
The latest announcement did not go down well with several figures on Crypto Twitter.
A pseudonymous crypto trader decried that Saylor will bring the next Bitcoin bear market.
They also doubted if Strategy could pay the aforementioned dividend, given that a 10% dividend on $500 million is $50 million annually and they “don’t have that cash.”
When Strategy shared its Q4 2024 earnings on Feb. 5, it reported that it had cash and cash equivalents of $38.1 million as of Dec. 31, 2024. In fact, the figure was $8.7 million less than the previous year. It also declared a Bitcoin holding of 447,470 coins.
Another analyst wondered if the company will be forced to sell some of its Bitcoin holdings. However, they didn’t concur with the view that the company’s strategy will lead to a market decline.
Crypto journalist Tim Copeland asked why Saylor didn’t stop after acquiring 300,000-400,000 Bitcoin. He added, “I feel like it’s diminishing returns if you own way too much of the circulating supply.”
Though businesses owning a lot of Bitcoin leads to fears of centralization, individuals still owned 84% of the available 17.262 million Bitcoin as of Dec. 31, 2024, excluding lost Bitcoin and Satoshi’s Bitcoin.
Strategy did not respond to TheStreet Roundtable’s request to comment.
