Key Points:
- Strategy Inc. (formerly MicroStrategy) adopted a new “Digital Credit Capital Framework” enabling the company to sell Bitcoin to fund stock buybacks and dividends.
- The company authorized a $1.25 billion BTC Monetization Program, officially breaking its long-held “never sell” treasury doctrine.
- The framework establishes a $2.55 billion USD Reserve policy alongside two new $1 billion programs to buy back common stock and preferred shares.
- The company raised its STRC preferred dividend to 12 percent per year to strengthen credit quality amid a depressed cryptocurrency market.
In a dramatic shift that marks the end of an era, the world’s largest corporate holder of Bitcoin has officially broken its cardinal rule. Strategy Inc., the digital asset and enterprise software pioneer formerly known as MicroStrategy, announced a comprehensive restructuring of its capital management. The company’s board of directors has approved the Digital Credit Capital Framework, a set of rules that officially permits the company to sell off portions of its Bitcoin holdings to fund stock buybacks, pay dividends, and repurchase corporate debt. This landmark decision marks a massive transition from passive, one-way accumulation to active balance-sheet management, completely upending the famous “never sell” doctrine advocated by Executive Chairman Michael Saylor.
The centerpiece of this newly established framework is the board-authorized BTC Monetization Program. This program grants management the explicit authority to sell up to $1.25 billion worth of its Bitcoin on the open market “from time to time.” This cash-generating mechanism is designed to replenish the company’s fiat reserves, fund stock buybacks, and cover its massive dividend obligations when market conditions make it advantageous to do so. For a company that spent the last five years aggressively issuing stock and debt to hoard every coin possible, treating its Bitcoin as a flexible, liquid treasury asset represents a monumental pivot in corporate strategy.
While the formal authorization went public on Monday, regulatory disclosures reveal that the company had already broken its “never sell” rule weeks earlier. The firm quietly executed its very first Bitcoin sale at the end of May, disposing of 32 Bitcoins to raise approximately $2.5 million in cash. Although a sale of 32 coins is a tiny drop in the ocean compared to the company’s massive holdings, the transaction shattered the symbolic “never sell” narrative that had served as a primary marketing tool for the company’s stock. Analysts note that this early transaction proved that management was already preparing for a transition toward active portfolio monetization to defend its balance sheet.
The new framework utilizes the anticipated proceeds from these potential Bitcoin sales to launch a double-pronged, $2 billion capital return program. The board of directors established two separate $1 billion share repurchase authorizations with no fixed expiration dates. The first program permits the company to repurchase its highly discounted Class A common stock, while the second program targets the buyback of its outstanding preferred securities, with its Variable Rate Series A Perpetual Stretch Preferred Stock (STRC) serving as the primary target. By buying back its own heavily discounted shares, the company hopes to enhance per-share equity value and close the massive valuation discount currently plaguing its stock.
To protect its credit quality and reassure nervous debt holders, the company has also instituted a strict, board-approved U.S. Dollar Reserve policy. As of June 28, the company’s USD Reserve balance stood at approximately $2.55 billion, which includes cash raised from shares sold under its active at-the-market offering program that had not yet fully settled. Under this new policy, management can only use this specific cash reserve to pay preferred stock dividends and interest on outstanding corporate debt, with any other use requiring explicit board approval. Based on its current annual dividend and interest expenses of approximately $1.76 billion, the reserve provides a comfortable 17.4 months of financial coverage.
Alongside these capital protection measures, the company announced an aggressive adjustment to its preferred stock dividend policy to support its credit standing. Effective July 1, the regular dividend rate on its STRC preferred shares will increase to 12.00% per year, up from its previous 11.50% rate. The company plans to evaluate this dividend rate on a monthly basis, factoring in trading prices, market yields, credit spreads, and overall Bitcoin price volatility. Executives emphasized that they will not raise the dividend solely because the preferred stock trades below par value, but will manage the rate dynamically to keep the securities attractive to institutional income-oriented investors.
The immediate operational changes resulting from this new capital framework were highly visible in the company’s weekly activity report. During the week ending June 28, the company successfully raised approximately $1.15 billion in cash by selling 12.67 million shares of its common stock through its active at-the-market offering. In a complete about-face from its historical behavior, the company did not buy a single Bitcoin with this massive influx of capital, choosing instead to park the entire sum inside its protective USD Reserve. This represents the first time in years that the company has raised over $1 billion in equity without immediately deploying it into the cryptocurrency market.
Despite the newly approved monetization options, the company’s total cryptocurrency exposure remains astronomically large. As of June 28, the company held a total of 847,363 Bitcoin on its balance sheet. However, because the company acquired this massive reserve at an aggregate purchase price of approximately $64.10 billion—representing an average cost basis of $75,651 per coin—the entire position is deeply underwater. With Bitcoin currently trading near $59,800, the company is nursing a staggering, estimated $14 billion in unrealized paper losses, which has put intense pressure on its stock price and forced the management team to adopt these defensive capital-management strategies.
Ultimately, the public release of the Digital Credit Capital Framework has successfully restored a measure of confidence to the company’s nervous shareholder base. Shares of the corporate treasury giant bounced by over 4.7% in morning trading, snapping a painful eight-session losing streak that had dragged the stock down to its lowest level since early February. While some purist cryptocurrency advocates are expressing disappointment over the end of the “never sell” era, Wall Street analysts are praising the shift toward active balance-sheet management. By treating its massive Bitcoin reserves as a flexible, monetizable asset rather than an untouchable relic, the company is proving it has the tactical flexibility to survive a volatile market cycle.
