Saylor Signals Massive BTC Buy as STRC Semi-Monthly Dividends Target $800K Bitcoin Stack

On Sunday April 19, Michael Saylor tweeted out an image titled "Think Even ₿igger" on X with a chart showing Strategy's history of buying Bitcoin. The tweet came one week after Strategy announced that they had purchased approximately $1 billion worth of Bitcoin between April 6 and April 12; purchasing 13,927 BTC at an average price of $71,902 per coinBitcoin Magazine, per their SEC 8-K filing. Those who have followed Strategy for a long time know what this tweet means; another purchase is coming, and the message makes it sound bigger than the last one.

Currently, Strategy has the largest Bitcoin treasury of any publicly-traded company, holding 780,897 coins with a total value of approximately $58.2 billion as of today. Based on the pace at which they're acquiring new coins, they will reach the 800,000 BTC mark soon; which might not have been a reasonable expectation for anyone who would have watched Michael Saylor back in 2020 when he first purchased Bitcoin.

The STRC Dividend Proposal Nobody Expected

Just prior to the "Think Even ₿igger" article being published, Phong Le (Strategy CEO) made an unexpected proposal to change from a quarterly payment schedule for dividend distributions (on STRC preferred stock) to a semi-monthly payment schedule (payable on the 15th & at the end of each month).

This change will not impact STRC's annual dividend rate (which remains 11.5%) and will not increase Strategy's total committed to making dividends but will change the pattern of those payments. The introduction of semi-monthly dividend payments is expected to reduce the average drop in the post-ex/dividend stock price, decrease volatility and provide for STRC prices to remain much closer to the company's par value of $100 over the long term.

A primary factor leading to a proposal of the change was as a response to a decline in demand after investors were no longer going to receive an upcoming dividend resulting in a slowdown in buying activity and in the rate of new share issuances (essentially the gap between dividend dates was long enough that investor appetite decreased between). If dividends had shorter gaps between them that would provide for a sustained interest in buying.

The Strategy has gone through numerous iterations before settling on a semi-monthly frequency; there were also discussions around using a weekly or even daily frequency for the issuance of dividends. Issuing dividends on a daily basis would have been very strange but it is indicative of the manner in which the team has approached this new financial instrument.

Why This Matters More Than It Looks

STRC would be the world's only preferred security/equity that pays dividends monthly if this is approved, which would make it very different from other forms of collateral and have utility as a more favorable means of borrowing against STRC shares (just to name a few). The structural advantage could benefit institutional investors (like banks), allowing them to hold significantly less capital on their balance sheets when they use STRC to leverage their positions, thereby increasing the market for STRC and effectively creating new opportunities for raising additional capital through the Strategy with the additional capital, will also use it to acquire more Bitcoin. This is all part of a feedback loop that was intentionally designed by Saylor so that all the pieces work together as planned.

The results of the vote on the new dividend payment schedule will be announced during the annual shareholders meeting on June 8. If passed, the new dividend payment schedule will go into effect in mid-July. Details of the full proposal are available in The Block's coverage.

The Numbers Behind the Strategy Machine

The Strategy dashboard's current record indicates $2.25 billion USD in reserves and $8.254 billion USD in debt, representing net leverage of 10%.The reserves noted within this $2.25 billion on the balance sheet supports another large acquisition of Bitcoin in the short term because the company has already demonstrated its willingness to deploy capital in this manner.

The Strategy's breakeven annual rate of return on STRC Preferred Equity is approximately 2.05%. Hence, Bitcoin needs to grow by at least that same amount each year to satisfy the dividend payments due to STRC Preferred Investors. Given how historically, Bitcoin's annual return has been far greater than 2.05%, hitting this low hurdle should not be a challenge.

In March, Strategy bought 46,233 BTC while miners mined approximately 16,200 BTC. In other words, Strategy accumulated nearly three times the newly mined supply during that same period — a figure confirmed by BEInCrypto's data breakdown. That is a phenomenal statistic that speaks volumes about the scale of what Strategy is doing in an indisputable way!

Q1 Losses and the Market That Doesn't Care

In the first quarter of 2022, digital assets experienced massive unrealized losses of $14.46 billion on the balance sheet. While this is a ridiculous amount of money to lose on paper, it would appear that the market is unaffected and remains stable.

In addition to the announcement of dividends, MSTR stock reacted positively to the announcement of future buys. As a result, MSTR shares surged by 29.45% from $125 to $166.52 today amid the latest buying cycle. The pattern has been established in the following manner: Strategy reports unrealized losses, followed by price recovery in Bitcoin, MSTR stock follows suit, Saylor issues an ambiguous signal via social media, followed by MSTR filing an SEC 8-K to confirm the acquisition of yet another 9-figure low-priced Bitcoin.

The playbook has been made public, and we are now no longer speculating on if Strategy will make additional digital asset purchases. The only uncertainty will be the quantity of purchases to be made, as well as how the spot markets will respond when the announcements are made.