Strategy sold 3,620 Bitcoins in the first half of 2026 to cover preferred dividend payments, a move that highlights a structural risk for investors holding the company's stock. Despite Bitcoin's price rising more than 20% over the past month, Strategy shares have rallied 35% in the same period, yet the company remains at a discount to its digital asset holdings. This divergence stems from concerns that Strategy may need to liquidate its Bitcoin reserves to service its debt-like obligations.
Strategy holds 845,050 Bitcoins, valued at $63.5 billion, which represents 4.02% of Bitcoin's total lifetime supply. These assets exceed the company's enterprise value of $50 billion. Bulls argue this gap indicates the stock is undervalued and will eventually trade at a premium to its Bitcoin holdings. However, bears contend the discount is justified because Strategy must sell Bitcoin to fund its preferred dividends, creating a potential conflict between asset accumulation and liability management.
The pressure on Strategy's balance sheet is driven by four classes of preferred shares issued last year: Strife (STRF), Stretch (STRC), Strike (STRK), and Stride (STRD). According to data from Strategy, STRF launched in March 2025 with a 10% fixed quarterly dividend. STRC began trading in July 2025, offering a variable monthly dividend of approximately 11.5%. STRK debuted in January 2025 with an 8% fixed quarterly rate, while STRD started in June 2025 with a 10% fixed quarterly payout.
Strategy originally issued these preferred shares to raise cash for additional Bitcoin purchases. However, the company spent more than $500 million on dividend payments in the first half of 2026. During that same period, Bitcoin's price declined by more than 30% between January 1 and June 30. To meet its dividend obligations without taking on further debt, Strategy sold the 3,620 Bitcoins, which are worth $272 million today.
Critics describe this cycle as reckless: issuing preferred shares to buy Bitcoin, then selling that Bitcoin to pay the dividends on those shares. The strategy relies on Bitcoin's price remaining high enough to support new share issuances via at-the-market offerings. If Bitcoin's price falls sharply, Strategy may struggle to find buyers for new shares, causing cash flow to dry up. The company's legacy software business does not generate sufficient cash to cover these expenses independently.
Over the past 12 months, Strategy's stock has fallen 60%, underperforming Bitcoin's 32% decline over the same period. This performance gap underscores the market's skepticism regarding the sustainability of Strategy's capital structure. Investors considering MSTR as a proxy for Bitcoin exposure must weigh the potential for asset growth against the risk of forced liquidation to service preferred dividends.