Strategy Posts Record Q2 Loss as Falling BTC Prices Pressure Treasury

Strategy, the world’s largest corporate Bitcoin holder, said it has built a $3.75 billion cash reserve that can support more than two years of preferred dividend and interest payments as investors continue to question its expanding capital structure.

The company reported an $8.2 billion net loss for the second quarter after Bitcoin’s price decline significantly reduced the value of its digital asset holdings.

Nearly all of the quarterly loss came from an $8.32 billion unrealized reduction in the value of its Bitcoin portfolio under fair-value accounting rules.

As of July 26, Strategy held 843,775 BTC, marking a 25% increase from the start of the year. At current market prices, the company’s Bitcoin holdings are worth around $54.8 billion, compared with its total purchase cost of $63.7 billion.

The results were released as investors continued to evaluate whether Strategy’s debt and equity strategy, which includes multiple preferred stock offerings, common shares, and convertible notes, can remain sustainable over the long term.

This year, the company raised $17.06 billion through at-the-market stock sales, repurchased $1.5 billion in convertible debt at an 8% discount, and expanded its dollar reserve to $3.75 billion. Strategy said the reserve provides enough liquidity to cover more than two years of dividend distributions and interest payments.

CFO Andrew Kang said the company’s USD reserve is currently sufficient to meet existing preferred dividend commitments and interest expenses for over 2.1 years.

Strategy also sold approximately $218.4 million worth of Bitcoin through its BTC Monetization Program to increase liquidity and support preferred stock dividend payments. The sale marked a departure from the company’s long-running strategy of accumulating Bitcoin without disposing of its holdings.

Executive Chairman Michael Saylor said Strategy remains committed to expanding its “Digital Credit” business despite weaker Bitcoin prices and cautious market sentiment.

Saylor said the company is continuing to evolve its business model and position Digital Credit as a new asset category despite ongoing skepticism from investors.

The company also approved a $1 billion share buyback plan for its MSTR common stock, though it has not yet repurchased any shares under the program. Separately, Strategy bought back about $25 million worth of STRC preferred shares at a discount and said it intends to continue purchasing them while they trade below their stated value.