Delphi Digital: Strategy to Increase BTC Holdings Financial Boundaries Can STRC Continue to Drive?

Author: Delphi Digital; Translation: @GoldenFinanceXZ

Delphi Digital’s latest report “How Far Can Saylor’s Strategy Go?” is now published! Here are the main points:

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

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

The early motivation for Strategy to buy Bitcoin came from the huge premium of its stock. At that time, MSTR’s trading price was far above the value of its held Bitcoin, allowing new share issuance to directly increase Bitcoin per share.

However, at the current level of approximately 1.24 times the enterprise value to net asset value ratio, this logic is weakening. The issuance of common shares has approached the breakeven point and can no longer provide the same clear path for increasing Bitcoin per share.

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

Now, STRC has taken on more responsibilities. It allows Strategy to access yield-oriented investors willing to finance at an 11.5% annual dividend (paid monthly), rather than investors seeking to benefit from MSTR’s stock price appreciation. The raised funds can continuously flow into Bitcoin without adding another maturing convertible bond burden.

And the cost is the ongoing interest obligations generated by STRC. Each financing increases Bitcoin holdings at present, but also means a future dividend payment obligation. If Bitcoin rises and MSTR’s premium is maintained, this structure can absorb these costs. If Bitcoin stagnates sideways, the interest payments will continue to accumulate, while the efficiency of issuing more common shares diminishes.

The pressure 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 to pay preferred stock dividends? Strategy’s cash reserve of $2.25 billion can cover the approximately $1 billion worth of warrants due in September 2027. This buys time, but a larger repayment hurdle in 2028 still needs a solution.

The next boundary is the $28.3 billion STRC authorized issuance limit. Within this cap, STRC can continue increasing Bitcoin holdings to offset dilution related to dividends.

If the issuance limit of STRC cannot be expanded, once the cap is reached, the ability to buy Bitcoin to offset dilution will slow down or stop, while the dividend payment obligations still remain.