Strategy estimates $20.9 billion Q3 gain, spends six times as much on STRC buybacks as on bitcoin

Strategy (formerly MicroStrategy), the U.S.-listed company, estimated a $20.91 billion gain on its bitcoin holdings for the third quarter (July-September). The company disclosed the estimate, along with last week's bitcoin purchases, in a Form 8-K filed with the U.S. Securities and Exchange Commission (SEC) on Oct. 5 (local time). A proxy statement filed the same day includes a proposal to pay preferred stock dividends daily.

From a June loss to a gain in three months

Strategy estimated its digital asset carrying value at $70.82 billion as of Sept. 30. At that point it held 847,666 BTC, with an aggregate purchase price of $63.95 billion including fees, or an average of $75,436.6. The company said the fair value of its bitcoin holdings exceeded their cost basis as of Sept. 30.

Based on Binance daily closing prices, bitcoin rose about 43% in three months, from $58,624 on June 30 to $83,623 on Sept. 30. At the end of June, the market price was below Strategy's average purchase price. The company reversed the $4.12 billion deferred tax asset (an amount that can reduce future taxes) it had recorded as of June 30 for that loss. As a result, it said its estimated Q3 deferred tax expense fell from about $6 billion to $1.88 billion. The figures are estimates prepared by management.

334 bitcoin, and $176.3 million on preferred stock

Strategy bought no bitcoin on Sept. 28-30, and its only purchase was 334 BTC for $28.7 million on Oct. 1-4, at an average of $85,838.8. Of that amount, $15.7 million came from selling 92,894 shares of common stock (MSTR) through its at-the-market (ATM) program, and $13.0 million came from USD Cash. That brought its holdings to 848,000 BTC as of Oct. 4.

Over the same period, the company repurchased 1,773,802 shares of STRC, its variable-rate perpetual preferred stock, for $176.3 million: $102.6 million on Sept. 28-30 and $73.7 million on Oct. 1-4. That is more than six times the $28.7 million it spent on bitcoin during the week. The buybacks were funded with $154.1 million of USD Cash and $22.2 million of interest earned on cash, cash equivalents and short-term investments.

As of Oct. 4, $547.2 million remained available under its preferred stock repurchase program, and the $1.0 billion MSTR repurchase program was unused. Over the same period, Strategy used $142.5 million of its USD Reserve to pay preferred dividends and interest on its debt. As of Oct. 4, the USD Reserve stood at $4.88 billion and USD Cash at $833.4 million.

Oct. 28 vote on daily preferred dividends

Strategy will hold a virtual special meeting of stockholders at 10 a.m. Eastern Time on Oct. 28 (11 p.m. KST). The proposal would amend the terms of its four preferred stocks (STRF, STRC, STRK and STRD) to pay dividends every business day. Common stockholders of record as of Sept. 25 will vote, and approval requires a majority of the voting power of all outstanding common stock.

If approved, STRC, which currently pays dividends twice a month, would pay dividends every business day starting Nov. 2. The company said it intends to declare November dividends at an annual rate of 12.00% around Oct. 15, conditioned on approval. The other three, which pay quarterly, would switch to daily payments starting Jan. 4, 2027. The company said the changes do not increase or decrease total dividends or change dividend rates. Executive Chairman Michael Saylor and CEO Phong Le said in a letter to stockholders that the change aims to improve liquidity and trading efficiency by shortening the time it takes to receive dividends.

"For holders of our Digital Credit instruments, a daily dividend cadence is intended to enhance liquidity, trading efficiency and reinvestment timing by reducing the time between earning and receiving dividends."

Michael Saylor, Executive Chairman, and Phong Le, CEO, letter to stockholders

Bitcoin at 116.26 million won on Upbit

At 10:30 a.m. KST on Oct. 6, bitcoin traded at 116,261,000 won on Upbit's Korean won market. At the same time, it was $85,964 on Binance, close to Strategy's average October purchase price. The Binance price converted to won was about 115.43 million won, putting the kimchi premium (the gap between prices on Korean exchanges and global markets) at about 0.7% on Upbit.