MicroStrategy recently revealed the significant advantages of its Bitcoin strategy, stating that a 2.05% annual growth in the value of its Bitcoin holdings is enough to indefinitely support all dividends of its Series A perpetual preferred stock without the need to issue more common stock. This figure highlights that even a slight increase in Bitcoin prices is sufficient for the company to maintain dividend payments from its digital asset reserves.
Small Bitcoin Growth Secures Dividend Payments
MicroStrategy currently holds 766,970 BTC, with a latest valuation of nearly $58 billion and an average purchase cost of $75,648 per coin. Saylor's calculations indicate that at the current reserve level, the company can cover nearly fifty years of dividends assuming Bitcoin grows at the breakeven rate. The company's public dashboard shows that MicroStrategy has approximately 48.7 years of dividend coverage capability based on its existing BTC holdings.
Preferred Stock Structure Supports Bitcoin Accumulation
The STRC variable rate Series A perpetual preferred stock issued by MicroStrategy currently has an annual yield of 11.5% and is trading close to its $100 par value. STRC pays cash dividends monthly and has become one of the main tools for the company to raise funds for purchasing more Bitcoin.
The funds raised from the STRC issuance continue to drive MicroStrategy's Bitcoin acquisition strategy, further strengthening the close relationship between its preferred stock and crypto investment model. The company's financial strategy is relatively rare among publicly traded companies, relying almost entirely on the appreciation of digital assets to support returns for preferred shareholders.
Chairman Saylor recently showcased this breakeven metric to investors and the public: “Our Bitcoin breakeven annual yield is approximately 2.05%. If Bitcoin grows at a rate exceeding this level, we can indefinitely cover our dividends without issuing new $MSTR stock.”
In his post, Saylor also included the message “Think ₿igger,” showcasing the company's accumulated Bitcoin purchases and expressing optimism about the ongoing accumulation.
This approach relies on the long-term appreciation of Bitcoin to meet the company's high yield obligations, rather than traditional business revenues or debt instruments. Information about Bitcoin metrics in the company's weekly Sunday social media posts often precedes regulatory filings announcing new cryptocurrency acquisitions.
The company's strategy also demonstrates confidence in digital assets as a reliable long-term reserve, further solidifying MicroStrategy's unique position among publicly traded tech companies.