Shift in Bitcoin acquisition strategy
Michael Saylor's company, Strategy, has not purchased Bitcoin in the past five weeks. Its most recent acquisition occurred during the week of June 15 through June 21, when the firm bought 520 Bitcoin coins for $35 million. This averages out to about $67,068 per Bitcoin. At the time of this report on July 29, Bitcoin is trading at a lower price than the average purchase cost. This buying halt adds to a pattern that began with Bitcoin sales in late May 2026 and continued with two additional sales in late June and early July.
These changes in MSTR's approach highlight a broader shift in its strategy. Previously, the company focused heavily on acquiring Bitcoin assets to grow its treasury. Now, it is redirecting capital toward managing its financial obligations and maintaining cash reserves. These actions suggest that the core business model Strategy once pioneered may no longer be as effective or sustainable under current market conditions.
The end of the flywheel model
Strategy popularized a 'flywheel' strategy that relied on its stock trading at a premium to its net asset value. Under this model, the company could issue additional equity, use the funds to acquire more Bitcoin, and gradually increase Bitcoin holdings per share. This helped maintain its premium valuation and fueled the company's growth. However, this method has faltered when the stock price dipped below NAV, causing the model to stall.
As of now, Strategy's stock trades at only 0.6 times its net asset value. Even when accounting for enterprise value and capital structure obligations, the valuation only rises to about 1 times NAV. In this financial position, issuing more shares to fund Bitcoin purchases is not a viable option. The company must rethink its approach to capital generation and asset management.
Cash reserves and financial obligations
Beyond Bitcoin management, Strategy must address its financial obligations. The company faces annual dividend payments and interest expenses totaling $1.76 billion. This includes 12% on its perpetual preferred stock known as Stretch, a financial tool designed to attract investors seeking passive income. The Stretch dividend rate was increased to 12% on July 1, requiring the company to maintain strong liquidity.
Despite Strategy's software business generating $490 million in annual revenue, this is insufficient to meet its financial obligations. To address the gap, the company maintains cash reserves of $3.75 billion. This is well above the 12-month expense requirement, covering expenses for over two years. Strategy's CEO, Phong Le, emphasized that the company is transitioning from relying on capital issuance to a more active and strategic form of capital management.
While this shift is significant, Strategy remains a high-risk investment. The company's success is tied closely to Bitcoin, a highly volatile cryptocurrency. Furthermore, its financial structure is complex and leans heavily on managing preferred stock dividends. These factors introduce additional risk and volatility, which is not ideal for investors looking for stable exposure to Bitcoin. Experts recommend direct Bitcoin purchases or Bitcoin ETFs instead for those seeking exposure to the cryptocurrency market.