“Strategy has built a digital fortress anchored by 713,502 Bitcoin and our shift to digital credit, which aligns with our indefinite Bitcoin horizon," Strategy co-founder and Executive Chairman Michael Saylor said in a statement to shareholders.
Strategy’s swoon has outpaced Bitcoin’s 44% decline over the past six months, leaving investors wary toward the company positing itself as a leveraged Bitcoin bet, which has accumulated its stockpile through a combination of preferred shares and convertible debt.
Strategy President and CEO Phong Lee highlighted the adoption of Strategy’s variable rate, or STRC, preferred share. He described the product that currently pays 11.25% monthly as the company’s “flagship Digital Credit instrument” at $3.4 billion in size.
Meanwhile, the company’s enterprise value has drawn close to the value of its Bitcoin holdings, yielding a so-called mNAV of 1.1, per Strategy’s website. Strategy’s measurement takes into consideration its debt and cash, while other metrics look purely at market capitalization. In that sense, Strategy has been valued at a discount to its Bitcoin since late November.
As that premium has vanished over the past year, it’s become increasingly difficult for the company to increase the amount of Bitcoin that it owns per share by issuing common stock, among its most common moves.
