Michael Saylor on Monday said selling Bitcoin (CRYPTO: BTC) to fund STRC dividends is “a big nothing burger” since Strategy Inc. (NASDAQ:MSTR) would buy 20 BTC for every one it sells.
Saylor Says Bitcoin Sale Impact Would Be Immeasurable
Saylor sat down with CoinDesk at Consensus in Miami to address concerns raised during Strategy’s earnings call about potentially selling Bitcoin to fund dividend obligations.
“If we were to fund all of our dividends exclusively by selling bitcoin over the next year, we would buy 20 Bitcoin for every one we sold,” Saylor said.
“So it’s no different than buying 20 Bitcoin and selling no Bitcoin,” he added.
From a market perspective, the impact would be minimal since Bitcoin has somewhere between $20 and $50 billion of liquidity today.
If Strategy were to fund all dividends with Bitcoin, it would be around $3 million, which Saylor called immeasurable and really inconsequential.
Why Strategy Buys Bitcoin At Weekly Highs
Saylor addressed critics on X who say Strategy always buys the weekly high on Bitcoin. He called it an ignorant criticism and explained the mechanics behind the timing.
Strategy buys Bitcoin with equity swaps when the equity has rallied and there’s a massive equity premium.
When Bitcoin surges, the equity surges and the premium expands, making it more profitable to swap.
In a week of 168 hours, there might be three hours during which the market has rallied, and Strategy might raise $250 million of swaps in those three hours.
“So yes, we’re picking the top of the bitcoin market, but we’re also picking the top of the equity capital market and swapping the two of them — and we’re generating a much larger gain,” Saylor said.
STRC Growth Rate Hits 400% As Supply Expands
Saylor explained how STRC differs from typical bonds. Strategy constructed the instrument as a perpetual preferred that never comes due.
When someone decides to sell $2 billion of STRC, Strategy is not redeeming it. There is no liquidation right, no put right, and it’s not a bank deposit.
Strategy agrees to pay SOFR plus a credit spread forever, while the investor agrees to give Strategy the money forever. Strategy plans to hold Bitcoin forever.
STRC has been trading at a slight discount to par recently and is taking longer to recover after dividend dates.
Saylor added that Strategy sold $3.2 billion in a couple of weeks on an instrument with a basis of around $5 billion, expanding the supply by a huge factor. At almost a 400% growth rate, the digestion period doesn’t surprise him.
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