Strategy's Capital Shift: Preferred Shares Take the Lead

Strategy raised $1.18B via preferred shares (STRC) to buy Bitcoin, marking a capital model shift as common stock price lags. Holdings hit 761,068 BTC amid rising dividend costs.

For the first time in the company's history, its common stock was not the primary funding source for Bitcoin acquisitions last week. That role was instead assumed by the preferred share series, STRC. This pivot marks a fundamental change in Strategy's capital model.

A Landmark Purchase and Mounting Holdings

The capital raised through STRC emissions last week, totaling approximately $1.18 billion, was channeled directly into purchasing 22,337 Bitcoin at an average price of $70,194 per coin. This transaction represents the company's twelfth consecutive weekly purchase and its fifth-largest single-week buy in corporate history. With this addition, Strategy's total Bitcoin holdings now stand at 761,068 coins.

The $1.18 billion generated from STRC significantly outpaced the $396 million raised from common stock (MSTR) sales during the same period. The rationale for this shift is clear: the common share price has declined more than 70% from its peak, making further dilution through equity issuance unattractive at current levels. The STRC instrument allows Strategy to raise capital without issuing new common shares.

Rising Dividend Obligations and Price Pressure

The increasing reliance on STRC comes with growing fixed obligations. The recent $1.18 billion emission alone, at the current dividend rate of 11.5%, creates an annual dividend burden of roughly $135 million. The company's total annual dividend payout now exceeds $1 billion. Strategy has stated it maintains a buffer of about $2.25 billion in USD reserves.

However, the preferred shares are showing signs of strain. STRC has traded below its $100 par value for three consecutive days—a signal that may prompt Strategy to increase its dividend rate by another 25 basis points. Since its launch in July 2025 with an initial yield of 9%, the dividend rate has already been raised seven times.

Unrealized Losses and a Critical mNAV Threshold

Despite the ongoing accumulation, Strategy's Bitcoin treasury is currently in a paper loss position. The total acquisition cost of $57.6 billion exceeds the current market value of its holdings, resulting in an estimated $1.7 billion in unrealized losses as of March 15.

The situation becomes structurally critical when the mNAV—the ratio of market capitalization to the net asset value of the Bitcoin holdings—falls below 1.0. In this state, at-the-market (ATM) equity offerings lose their value-accretive character. This threshold was crossed in March 2026. Critics warn that the substantial dividend burden from preferred shares could become unsustainable if Bitcoin's price decline persists.

The Road to One Million Bitcoin

Strategy remains committed to its stated goal of holding one million Bitcoin by the end of 2026. The overarching "42/42" capital plan envisions total equity and convertible bond emissions of $84 billion by 2027. Remaining capacity includes $6.3 billion under the MSTR ATM program and $1.96 billion under the STRC program.

The model's sustainability now hinges on three key variables: the price trajectory of Bitcoin, the stability of the STRC price above its par value, and the company's ability to service the escalating dividend payments from ongoing revenue or its cash reserves.