Strategy, the Bitcoin treasury firm formerly known as MicroStrategy, announced a 'Digital Credit Capital Framework' on Monday, outlining conditions for potential Bitcoin sales. Under a board-approved 'BTC Monetization Program', the firm may sell up to $1.25 billion in Bitcoin to fund its USD Reserve, pay preferred stock dividends, or repurchase securities. This move aims to strengthen credit quality and manage liquidity as its flagship preferred stock STRC trades significantly below par. The company emphasized its commitment to Bitcoin as a primary reserve asset while needing active capital management. Currently, Strategy holds 847,363 Bitcoin valued at ~$51 billion, with an unrealized loss of $13.1 billion. The cash reserve stands at $2.55 billion, enough to cover 18 months of dividends but down from $2.25 billion earmarked earlier. Analysts had called for increased cash reserves after cover dipped to 14 months. STRC's dividend was raised 50 basis points to 12%, marking its eighth increase. Strategy also authorized up to $1 billion in preferred stock buybacks and $1 billion in common stock repurchases to capitalize on market dislocations. The company said it would not issue new common shares to buy Bitcoin unless trading at a premium to its Bitcoin holdings (mNAV currently 0.99). On prediction market Myriad, traders see a 15% chance Strategy holds over 1 million Bitcoin by year-end.

Key facts

• Strategy's board approved selling up to $1.25B in Bitcoin for cash reserves, dividends, or buybacks.
• The firm holds 847,363 BTC (~$51B) with an unrealized loss of $13.1B.
• Cash reserve rebuilt to $2.55B, covering 18 months of dividends.
• STRC dividend raised to 12%, its eighth increase; stock trades below par.
• Strategy authorized $1B each in preferred and common stock buybacks.
• No new common shares issued for Bitcoin purchases unless at premium to holdings.

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