Michael Saylor’s comment this week that Strategy might sell portions of its Bitcoin holdings, is a decision that gives the BTC treasury company Strategy, optionality, according to BTC advocate Samson Mow.
“Never selling limits optionality. Public markets are war. In war, you need all available tools at your disposal,” Mow said after company co-founder Saylor’s comment during Strategy’s first-quarter earnings call on Tuesday. That the company might sell some BTC in the future, Mow added:
“The more tools Strategy holds, the fewer angles its adversaries have. A company with real optionality is hard to game: it might sell, hedge, issue, or buy. A company that has publicly vowed to only ever do one thing has handed a map to short sellers and arbitrageurs.”
Strategy is the largest publicly traded Bitcoin treasury company, according to BitcoinTreasuries, and holds 818,334 BTC at the time of this writing, and any potential sales could weigh on spot BTC market prices, according to some crypto market analysts.
Strategy’s total BTC holdings over time. Source: Strategy
Related: Strategy takes Bitcoin buying breather ahead of Q1 earnings report
As he signals potential BTC sales, Saylor says company can fund dividends “forever” on BTC alone
“We’ll probably sell some Bitcoin to fund a dividend, just to inoculate the market, just to send the message that we did it,” Saylor said during the earnings call.
He said that if the price of BTC appreciates by more than 2.3% annually, the company can fund its dividends “forever” and would also allow Strategy to pay dividends “without selling a single share of stock.”
“We could stop selling MSTR common stock right now,” Saylor said, adding, “We can fund the dividends with Bitcoin sales.”
Saylor discusses paying dividends using BTC appreciation. Source: Strategy
If the company can issue more of its STRC preferred stock and BTC rises above the breakeven level, it would be able to fund dividends indefinitely, while also continuing to increase the amount of BTC it holds, Saylor said during the earnings call.
The average cost of Strategy’s BTC holdings is $75,537 apiece, according to the company’s website. At last look on Thursday, Bitcoin was changing hands at about $79,976, according to CoinMarketCap.
Strategy funds its BTC purchases through a mixture of corporate debt and equity instruments, a practice that has raised concerns with some investors over shareholder dilution and leverage-fueled buying.
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