Strategy adopted a new Digital Credit Capital Framework on Monday that authorizes the company to sell bitcoin to fund stock buybacks — a reversal of the approach it has followed since designating bitcoin its primary treasury reserve asset.
The bitcoin treasury company adopted a new Digital Credit Capital Framework that includes up to $1B in common stock repurchases and a bitcoin monetization program
Cheng Xin / Getty Images
Strategy adopted a new Digital Credit Capital Framework on Monday that authorizes the company to sell bitcoin to fund stock buybacks — a reversal of the approach it has followed since designating bitcoin its primary treasury reserve asset.
Two separate repurchase authorizations sit at the center of the framework: one covering up to $1 billion in preferred securities and another covering the same amount in class A common stock. A bitcoin monetization program is also part of the package, giving management discretion to sell bitcoin and direct the proceeds toward any combination of reserve building, dividend and interest obligations, or the repurchase programs. Neither the repurchase authorizations nor the bitcoin monetization program carries any requirement to transact.
"Strategy is evolving from one-way capital issuance to active capital management," CEO Phong Le said in a statement. The CEO described the company's new posture as one of two-way flexibility — putting capital out when conditions favor issuance and pulling it back when buybacks create value.
The board authorized bitcoin sales of up to $1.25 billion to build the USD reserve. Adding that potential $1.25 billion to the $2.55 billion already on hand as of June 28 would bring total liquidity available to cover preferred dividends and interest to approximately $3.8 billion — enough to absorb nearly 26 months of the company's roughly $1.76 billion in annual obligations. Going forward, board policy will require the reserve to cover no less than a year's worth of dividend and interest expense at any given time.
As part of the framework, Strategy raised the annual dividend rate on its Variable Rate Series A Perpetual Stretch Preferred Stock, which trades under the ticker STRC, to 12% from 11.5%, effective for dividend periods beginning July 1. The company said its goal is for STRC to trade in a range of approximately $99 to $100, close to its $100 stated amount.
The announcement follows a difficult stretch for the company, according to The Wall Street Journal. The preferred shares had sunk to a record low of roughly $75, a 25% gap beneath their $100 face value, while the common stock had shed more than 80% of its value since its November 2024 high. When a company's market capitalization falls below the value of its underlying assets — as happened here — fresh share issuance destroys value for existing holders rather than creating it, effectively closing off Strategy's primary tool for acquiring more bitcoin.
Strategy had sold 32 bitcoin between May 26 and May 31 for roughly $2.5 million to fund preferred dividend distributions — the first time it had sold any bitcoin since late 2022. Monday's framework formally extends that approach, giving the company board-level authorization to sell bitcoin for liquidity and capital management purposes. The company's total bitcoin position stands at 847,363 coins.
Executive Chairman Michael Saylor said in a statement that the company "remains committed to Bitcoin as its primary treasury reserve asset" while acknowledging that its preferred securities require "liquidity, discipline, and active capital management."
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