Strategy financing model faces rising bitcoin costs, K33 says

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Strategy faces rising bitcoin costs

Highlights

K33 estimates Strategy's annual preferred dividend obligations rose to $1.56 billion, up $725 million from earlier this year due to STRC expansion.
K33 analysis finds Strategy would hold 4,947 fewer BTC under its actual STRC-based funding model versus a scenario reallocating $7.5 billion from STRC directly into bitcoin.
Strategy's dollar reserve can cover about 42 months of dividends, but K33 questions the merit of holding 4% yielding cash while STRC pays a 12% coupon.

Preferred stock costs and hypothetical bitcoin holdings

As reported by The Block, citing K33, Strategy would have held 843,303 BTC on Oct. 12 if it had largely avoided using its STRC preferred stock to fund bitcoin purchases this year, compared with its actual holdings of 848,250 BTC.

In a new report, K33 Head of Research Vetle Lunde said the alternative calculation removes about $7.5 billion raised through STRC in the first half of 2026. The model assumes the $4 billion Strategy earmarked for its dollar reserve from May through August, along with $1.6 billion in STRC buybacks, would instead have been deployed into bitcoin, while 90% of STRC dividend payments would also have been avoided and redirected using weekly average bitcoin prices.

Lunde argued that, while the preferred shares helped Strategy acquire nearly 100,000 BTC earlier in the year without issuing more MSTR shares, the long-term tradeoff is unfavorable. He wrote that the preferred financing model appears to have been a mistake because the dividend burden continues after the bitcoin purchases are completed.

Dividend burden shapes future funding debate

K33 estimated Strategy's annual preferred dividend obligations at $1.56 billion, up from about $830 million earlier this year, with STRC's expansion accounting for $725 million of that increase. At a bitcoin price of $83,000, Lunde said that added yearly cost is equal to about 8,740 BTC, enough to erase the 4,947 BTC gap between Strategy's actual holdings and K33's hypothetical balance in roughly seven months.

The research firm said Strategy's dollar reserve still offers a buffer, estimating it can cover about 42 months of dividend payments and lowering the near-term risk that the company would need to sell bitcoin. Even so, Lunde questioned the economics of holding cash that earns an assumed 4% return while STRC carries a 12% coupon, arguing that common stock issuance would be a more efficient route for future bitcoin purchases.

Strategy has also stepped up STRC buybacks in recent weeks, with the preferred shares closing at $99.90 on Oct. 13, just below their $100 par value. In September, the company proposed shifting STRC and three other preferred stocks to daily dividend payments, a change that still requires shareholder approval and that Strategy said would not raise its regular dividend obligations.

General Atlantic’s planned IPO in 2027 was the focus of our earlier report, highlighting how the private capital group is considering a public listing to fund a broader expansion strategy and diversify into new markets and client segments. We noted that the firm has weighed timing and market conditions after a confidential filing, positioning itself to stand out as a growth-focused private equity player if it goes public.

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