MicroStrategy (NASDAQ: MSTR) has taken a significant strategic turn, authorizing the sale of up to $1.25 billion worth of bitcoin from its treasury to enhance liquidity. The move comes as the company’s market capitalization briefly dipped below the value of its massive bitcoin holdings for the first time, a key metric closely watched by investors.
Under the new Digital Credit Capital Framework, the company’s board has set a formal USD reserve target of $2.55 billion, up from $871 million in late May. This reserve, combined with the newly approved bitcoin sale capacity, brings total available liquidity to roughly $3.80 billion. That amount covers approximately 25.9 months of preferred dividends and interest payments, based on the current annual burden of $1.76 billion.
Strategic Shift in Capital Management
The framework marks a departure from MicroStrategy’s long-standing “buy and hold” bitcoin strategy. CEO Phong Le described the change as a shift from “one-way capital issuance to active capital management.” Executive Chairman Michael Saylor emphasized that bitcoin remains the company’s primary treasury reserve, but noted that digital credit requires “liquidity, discipline, and active capital management.”
The company’s mNAV ratio—enterprise value divided by bitcoin holdings—stood at 0.99 as of last Friday’s close, according to Reuters. This is the first time the ratio has fallen below 1.0, meaning the company’s stock market value is now less than the value of the bitcoin it owns. Previously, MicroStrategy could sell shares at a premium to its bitcoin holdings and use the proceeds to buy more bitcoin, a strategy it called accretive. With the ratio near parity, management plans to be more cautious with new share issuance and may instead sell bitcoin directly.
Dividend and Buyback Details
To support the preferred stock market, the company raised the dividend on its Stretch preferred shares (NASDAQ: STRC) to 12%, effective from July record dates. The STRC shares, which have a par value of $100, were trading at $78.48 on Monday, well below the company’s $99-$100 target. The dividend is variable and not guaranteed.
The board also authorized up to $1 billion for repurchases of preferred stock, including STRC, Strife (STRF), Stride (STRD), and Strike (STRK), and another $1 billion for common stock buybacks. This gives management the flexibility to step in and buy shares when they believe the stock is undervalued.
Reserve Build-Up Timeline
The company has been rapidly building its cash reserves in recent weeks. As of May 25, it held $871 million in USD, equivalent to about 5.9 months of coverage. By June 21, after a $335.5 million at-the-market (ATM) stock sale, reserves grew to $1.4 billion (9.5 months). The latest jump to $2.55 billion (17.4 months) reflects the new board-approved reserve policy and includes expected proceeds from ATM sales not yet settled.
Bitcoin Sale Authorization
The $1.25 billion bitcoin sale authorization represents about 21,100 bitcoin at current prices of $59,367, or roughly 2.5% of the company’s total holdings of 847,363 coins. Bitcoin currently trades below MicroStrategy’s average purchase price of $75,651, meaning any sale could crystallize losses for shareholders.
Notably, the company has already tested the waters. Between May 26 and May 31, it sold 32 bitcoin for $2.5 million to fund preferred stock dividends—a small amount but a symbolic break from its long-held buy-and-hold stance.
Market Reaction and Analyst Views
MicroStrategy’s class A shares rose 3.3% to $85.03 in early Monday trading, while STRC preferred shares jumped 5.2% to $78.48. The market appeared to view the liquidity measures as a positive step. Nic Puckrin, founder of Coin Bureau, called the plan a “responsible move,” while Andrei Grachev of DWF Labs noted that after the mNAV break, the company had two options: sell bitcoin or accept a lower share price. “Uncertainty itself becomes a reason to wait,” Grachev said.
CFO Andrew Kang summed up the new philosophy succinctly: “Bitcoin is capital.” The framework provides MicroStrategy with a more flexible toolset to manage its balance sheet, even as it remains the largest corporate holder of bitcoin.
