Strategy Just Changed How It Buys Bitcoin

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Strategy booked a record $21 billion gain on its Bitcoin in Q3, and STRC closed at $99.99 for the first time since May, one cent off par. On the earnings call we carried live, Phong Le said digital credit is now the primary way Strategy buys Bitcoin, and Michael Saylor said treasury companies bought 165% of this year's new supply. Before the call, British HODL and Grain of Salt launched The Big Bitcoin Show with Tyler and explained why the next big mistake would be spending all the cash on Bitcoin in a bull run, and why Strive should never touch its common ATM.

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Strategy's Next Bitcoin Will Be Bought With Digital Credit

Strategy now holds 848,517 BTC and booked a record $21 billion fair value gain on it in Q3, CFO Andrew Kang said on the earnings call we carried live. Bitcoin rose 43% in the quarter and MSTR rose 76%. Operating income was $20.9 billion and net income $19.1 billion, yet Strategy added only a net 1,666 BTC. The money went into defense instead: a dollar reserve that now covers 3.4 years of interest and dividends, and about $2 billion of STRC buybacks. It worked. STRC closed at $99.99, its highest close since May, "one penny away from par," said Kang, who steps down as CFO on November 5.

CEO Phong Le admitted "you might be able to argue that we overcharged" STRC, which grew from a $2.5 billion IPO to $10.5 billion in about eight months and then fell to around $75. Now the playbook flips. "The primary way to buy Bitcoin is by issuing digital credit," he said. Part of each raise goes to the dollar reserve and the rest buys Bitcoin, with new MSTR shares only "if the mNAV starts to expand aggressively." STRC switches to daily dividends with a November 1 record date. Saylor added that treasury companies acquired 220,000 BTC this year: "165% of all the Bitcoin mined this year."

Listen and subscribe for Saylor's full thoughts on a $100 trillion Bitcoin industry and why Strategy calls itself "the central bank of the crypto economy."

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Strategy and Strive Should Hoard Cash, Not Bitcoin, in the Next Bull Run

British HODL and Grain of Salt launched The Big Bitcoin Show with a warning for Strategy and Strive. "The biggest risk to all Bitcoin treasury companies is getting romanticized by acquiring the largest Bitcoin stack during a bull run," British HODL said. He expects the next mistake to come when the bull market kicks off and a company dumps all its cash into Bitcoin, breaking the prefs again. Grain modeled it: a company that keeps amplification at 50% all the way up sees it jump to 83% when Bitcoin then falls 40%. One that piles up cash instead ends at 40%.

British HODL thinks 24 months of cash will prove optimal, while Grain would have no problem with Strategy holding "four or five years of cash in the bull run." For Strive, with 43,000 BTC, "half a billion dollars" of cash and fewer than 100 employees, British HODL said the biggest accident would be hitting the ATM on the common stock, which would invite Wall Street to "follow the Jim Chanos playbook" and squeeze it back to 1x mNAV. His wish list for Strategy is an MSTR buyback funded by 25% of the preferred ATM, and a promise not to keep "diluting you into this next bull run."

Listen and subscribe for British HODL's and Grain of Salt's full thoughts on levering STRC 2x with no margin call and running the ATM in reverse.

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