Can the financial boundaries of Strateg's increased BTC holdings, STRC, continue to drive?

Author: Delphi Digital; Translation: @GoldenFinanceXZ

Delphi Digital’s latest report, “How Far Can Saylor’s Strategy Go?” has been released! The following are the main takeaways:

STRC has become the core of Strategy’s Bitcoin accumulation model.

The key question right now is: After deducting the common shares issued to meet preferred stock dividend payments, can Strategy’s next round of financing continue to increase Bitcoin holdings per share?

The driving force behind Strategy’s early purchases of Bitcoin was the massive premium on its stock. At that time, MSTR’s trading price was far higher than the value of the Bitcoin it held, enabling new share issuance to directly drive an increase in Bitcoin per share.

However, at the current level—around 1.24 times the enterprise value-based market cap-to-NAV ratio—this logic is weakening. The issuance of common shares is approaching breakeven, leaving no longer as clear a path for Strategy to grow Bitcoin per share.

Convertible bonds used to work because buyers were willing to accept low coupon rates in exchange for exposure to MSTR’s volatility. But that also left $8.2 billion in principal and a repayment schedule starting September 2027 that needs serious attention.

Nowadays, STRC is taking on more responsibilities. It enables Strategy to access financing from yield-oriented investors willing to fund an 11.5% annual dividend (paid monthly), rather than investors seeking to benefit from MSTR’s equity upside. The raised funds can continue flowing into Bitcoin without adding the burden of another maturing convertible bond.

The trade-off is STRC’s ongoing interest-payment obligations. Each financing round increases Bitcoin holdings today, but it also means an additional future responsibility to make dividend payments. If Bitcoin rises and MSTR’s premium can be maintained, this structure can absorb the costs. If Bitcoin falls into sideways trading, the interest-payment obligations will keep accumulating, while the efficiency of issuing more common shares declines.

The stress scenario is: Can the incremental value created by Bitcoin purchases financed through STRC continue to outpace the dilution effect caused by issuing additional common shares needed to pay preferred stock dividends for repayment? Strategy’s $2.25 billion cash reserve can cover the redemption of approximately $1 billion worth of put options due in September 2027. This buys time, but the much larger repayment “wall” in 2028 still needs a solution.

The next boundary is the $28.3 billion STRC authorized issuance limit. Within this cap, STRC can continuously increase Bitcoin holdings to offset dividend-related dilution.

If STRC’s issuance capacity cannot be expanded, once the limit is reached, it means the ability to buy Bitcoin to offset dilution will slow down or stop, while dividend-payment obligations will remain.