Preferred Stock Becomes Strategy's New Engine for Bitcoin Accumulation

Strategy (MSTR) is experiencing a significant shift in its new financial model. Last week, the company for the first time used preferred shares STRC as its primary financing tool for Bitcoin purchases, marking a notable evolution in its capital raising approach. On Monday, the company announced that it bought 22,337 Bitcoin in the past seven days, making it the fifth-largest single purchase in its history, with most of the funds coming from the issuance of preferred shares rather than traditional common stock financing.

How Preferred Shares Are Reshaping the Financing Landscape

This time, Strategy raised $1.18 billion through issuing preferred shares, far exceeding the $396 million raised via ATM (at-the-market offering) of common stock during the same period. This change is especially noteworthy because, for a long time, common stock has been the main source of funding for the company’s Bitcoin reserves—currently holding 761,068 Bitcoin, mostly acquired through ATM channels. Now, preferred shares have taken over as the core financing pillar.

This move reflects Strategy’s careful consideration of optimizing its capital structure. By financing through preferred shares, the company can secure ample funds without significantly diluting existing common shareholders. Especially given the current pressure on stock prices (the stock has fallen over 70% from its peak), financing via preferred shares helps protect existing shareholders’ interests while maintaining relatively stable stock prices.

Annual Dividend Burden Surpasses $1 Billion

As the scale of preferred shares expands, Strategy faces increasing financial pressure. The company’s preferred stock has now exceeded $10 billion in total, with a 11.5% dividend rate, resulting in annual dividend obligations surpassing $1 billion. The additional $1.18 billion raised in this round will add approximately $135 million to annual dividend costs.

However, the company is not without contingency plans. Strategy has reserved $2.25 billion as a dividend reserve fund to buffer these rising capital costs. This reserve provides the company with considerable financial flexibility to handle short-term dividend payments without relying heavily on new financing to cover the dividend shortfall.

Dividend Adjustment Expectations and Stock Price Support

It’s worth noting that the recently issued preferred shares have seen their prices decline. Since the ex-dividend date on March 15, these preferred stocks have fallen below their $100 par value for three consecutive trading days. If this downward trend continues, Strategy may consider increasing the dividend yield by 25 basis points to boost the stock’s attractiveness. While this would further increase the company’s costs, it could help stabilize investor confidence in the short term.

This trade-off reflects the current market environment—under rising financing costs and downward pressure on stock prices, the company may need to adjust dividends to keep financing channels open.

Bitcoin Breaks $70K, Market Focus on Geopolitical Factors

Alongside Strategy’s financing adjustments, the Bitcoin market is signaling new developments. Bitcoin has surpassed the $70,000 mark, with most gains maintained after U.S. President Trump announced a five-day pause on strikes against Iran’s energy infrastructure. Currently, BTC trades around $70,660, up 3.94% in 24 hours.

Correspondingly, alternative tokens also rose. Major cryptocurrencies like Ethereum, Solana, and Dogecoin each increased by about 5%. Traditional stock markets also showed strength—S&P 500 and Nasdaq each gained approximately 1.2%, indicating a broader risk asset rebound.

Future Trends Depend on Geopolitical Stability

Analysts suggest that Bitcoin’s next move—whether up or down—will likely depend on oil prices and the Strait of Hormuz shipping situation. If current conditions stabilize, with oil prices and freight rates remaining steady, Bitcoin could test the $74,000 to $76,000 range again; conversely, if geopolitical tensions escalate, prices might retreat to the mid-$60,000s. In this period of ongoing uncertainty, Strategy’s long-term Bitcoin accumulation strategy via preferred shares may serve as a hedge against market volatility.

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