Saylor sells BTC

This is so rich coming from the guy who literally said you should never sell Bitcoin.

Strategy reported its first-quarter earnings this week and it was a doozy. Beyond reporting a $12.54 billion loss, Chairman Michael Saylor said the firm plans to do something he said no Bitcoin holder should ever do: sell Bitcoin.

Saylor Just Broke His Own Religion

For years, Michael Saylor's whole shtick was simple: never sell your Bitcoin. Buy it, stack it, hold it, evangelize it on every podcast that would have him, scream about thermodynamic hornets, and call anyone who sells a heretic.

This week, he became the heretic.

On the Q1 call, Saylor laid out a new version of the "Bitcoin Strategy" that goes like this: you buy Bitcoin with credit, you let it appreciate, and then you sell Bitcoin to pay the dividend. That last clause is the part nobody on the maxi side of the internet was prepared for. Bitcoin fell from roughly $83,000 to $81,500 Wednesday afternoon on the news.

MSTR was down about 1%, which feels generous given the man went from Bitcoin's biggest bull to admitting he'll sell it inside 24 hours.

Why is he selling?

Strategy's been funding the Bitcoin pile by issuing a perpetual preferred stock called STRC, which pays holders 11.50% a year, in cash, every month, with the share price pinned near $100 par. The pitch to buyers is clean: high yield, near-stable instrument, backed by the world's largest corporate Bitcoin treasury. The pitch to Strategy is even cleaner: a constant firehose of fresh capital they shovel straight into more Bitcoin. They did their last big STRC raise in April.

The problem with perpetual preferred is right there in the word "perpetual." Every share they issue stacks another forever-obligation onto the cash dividend column. Based on March numbers, Strategy is already on the hook for just under $1 billion in cold cash to STRC holders every year. The software business does not generate a billion dollars. It does not generate a fraction of that.

So the company has two levers. They've got $2.25 billion in cash and cash equivalents, which the CFO Andrew Kang has historically pointed to as the dividend buffer. And they've got 818,334 Bitcoin worth roughly $66.6 billion. On the call, Kang said the cash reserve is still consistent at $2.25 billion but acknowledged that "years of coverage have shifted down with the growth of STRC."

My thoughts

Man, we NAILED this one over a year ago. You can checkout this video we released on the subject.