Strategy Sells 32 Bitcoin for $2.5M to Fund Preferred Dividends, First Sale Since 2022

§ 01 Executive Snapshot

• What: Strategy sold 32 Bitcoin for $2.5 million to fund preferred dividends, marking its first sale since 2022.
• Who: Strategy, led by Michael Saylor, is the key player involved in the Bitcoin sale.
• Why it matters: This sale demonstrates a shift in Strategy's approach to managing its Bitcoin treasury to meet cash obligations for preferred stock distributions.

§ 02 Key Developments

• Strategy sold 32 Bitcoin for approximately $2.5 million between May 26 and May 31, 2023, at an average net price of $77,135 per coin.
• The sale leaves Strategy with a total of 843,706 BTC at a blended cost basis of $75,699.
• The company declared cash dividends for its preferred stock series to be distributed on June 30, 2023, with the STRC series maintaining an 11.50% annual rate.

§ 03 Strategic Context

• This sale is the first reported disposal of Bitcoin since December 2022, when Strategy's subsidiary sold 704 BTC for about $11.8 million, mainly for tax-loss harvesting purposes.
• The recent sale reflects a new strategy to utilize Bitcoin holdings to fulfill recurring cash obligations related to preferred equity, diverging from Strategy's previous stance of not selling Bitcoin.

§ 04 Strategic Implications

• The immediate consequence of this sale could lead to a shift in investor perception regarding Strategy's long-term commitment to holding Bitcoin.
• Long-term implications may include a potential pattern of Bitcoin sales to manage preferred stock distributions, affecting the company's treasury strategy.

§ 05 Risks & Constraints

• Potential risks include market volatility affecting Bitcoin prices, which could hinder future sales or preferred stock obligations.
• Competition from other financial instruments and the performance of Bitcoin ETFs could impact the liquidity of Strategy's preferred stock issuance channel.

§ 06 Watchlist / Forward Signals

• The next monthly 8-K filing will provide insight into whether further Bitcoin sales are planned and how the 32 BTC sale impacts future distributions.
• Monitoring the performance of Bitcoin prices and the liquidity of preferred stock will be critical to understanding Strategy's ongoing treasury management decisions.