The bottom line of "never selling Bitcoin" is loosening! Strategy (MSTR.US) shifts to actively reducing holdings to improve the company's capital structure.

The world's largest enterprise Bitcoin holder, Strategy (MSTR.US), is gradually breaking away from its concept of "never selling any Bitcoin holdings." After accumulating Bitcoin worth $67 billion, Strategy co-founder and chairman Michael Saylor stated on Tuesday that they would consider selling Bitcoin if it could improve the company's capital structure or increase the "Bitcoin content per share" (a key metric used to market the stock to investors). Saylor likened Strategy to real estate developers and described a scenario where Bitcoin might be sold in the future. He stated that if a company buys land for $10,000 per acre and sells it for $100,000, using the profits to purchase more land or pay debt interest, no one would think that this diminishes the value of real estate, nor would anyone say it proves the business model has failed. He said, "The existence of real estate development companies is about buying land cheap and selling high. We are like a Bitcoin development company." Saylor added, "You use credit to repurchase Bitcoin, let it appreciate, and then sell Bitcoin to pay dividends. As long as the credit issued exceeds the breakeven point, this business model can continue to operate and grow." This so-called "Digital Asset Treasury" (DAT) business model pioneered by Saylor has been under pressure since the significant drop in cryptocurrency prices last October. Saylor's comments on Tuesday highlight that Strategy has evolved from a simple hoarding Bitcoin strategy to a more complex balance sheet operation model influenced by debt costs, preferred stock obligations, and shareholder preferences. In an interview in 2024, when asked when the company might sell its Bitcoin holdings, Saylor had previously stated "there is no reason to sell winners." However, in recent months, Strategy has hinted that at some point in the future, it may have to sell a portion of its Bitcoin holdings to fulfill dividend commitments. In November last year, Strategy's CEO Phong Le had said that the company could sell Bitcoin as a last resort. In the latest earnings conference call, Phong Le's statement was even more explicit. He said, "If selling Bitcoin for dollars, or selling Bitcoin to buy debt, and this is beneficial for each Bitcoin share, we will consider doing so in the future. We will not just sit there and say we will never sell Bitcoin." S&P Global, Inc. downgraded Strategy's credit rating to junk status in October last year, citing its high business concentration as a reason. The rating agency pointed out that Strategy's convertible debt might come due during a period of pressure on Bitcoin, forcing it to sell tokens at "depressed prices." Derek Lim, Director of Research at cryptocurrency market maker Caladan, said this rating signaled the beginning of a shift in Strategy's "never sell" stance, and Phong Le's recent statements only made this change more explicit, but had already hinted at it. Former Goldman Sachs Group, Inc. trader Rich Rosenblum, on the other hand, believes that this does not mean Strategy has undergone a permanent change. He pointed out, "The premium of Strategy is weakening, coupled with Bitcoin's underperformance compared to gold, may have brought a kind of 'wake-up call.' Now he is willing to realize some profits, to lock in a higher cost basis in case of a further decline before the end of the cryptocurrency bear market." Strategy's strategic shift is not without a trace. In December last year, the company established a USD reserve, which has now grown to $2.25 billion, specifically to ensure the ability to fulfill preferred stock dividend payment obligations and repay debt interest. Previously, the company had been funding Bitcoin purchases through the issuance of new stocks and bonds. Against the backdrop of a sharp decline in Bitcoin prices, relying solely on a passive hoarding, non-active management strategy has clearly put Strategy under increasing financial pressure. The core of this strategic adjustment is that Strategy's metric system for evaluating performance has changed shifting the focus from "how much Bitcoin is held" to "how much Bitcoin each share represents." This shift means that even in specific circumstances where some Bitcoin may be sold, as long as it can enhance the value of each Bitcoin share, it aligns with the company's long-term interest goals. Strategy uses "financial alchemy" to weather another Bitcoin collapse Strategy had previously faced a very challenging situation. As early as February 5, when the price of Bitcoin had halved from its historical high, the common stocks Strategy used to fund the purchase of Bitcoin saw an even greater decline. Strategy reported a net loss of $12.5 billion for the first quarter, reflecting the impact of the downward trend in Bitcoin prices on the book value at the beginning of the year. However, with Bitcoin prices rebounding to $80,000, Strategy's stock price also rose. This was largely credited to a hybrid security strategy Strategy started last year perpetual preferred stock. These dividend-paying securities were used to finance Saylor's current Bitcoin buying frenzy. Market observers believe that amidst the overall market uncertainty triggered by the conflict in the Middle East, Strategy (which purchased over $4 billion worth of Bitcoin in April) provided support for the demand for this cryptocurrency. These niche securities are usually used by banks, utility companies, and real estate enterprises to meet regulatory capital requirements and are mainly issued to institutional investors. Strategy, on the other hand, promoted its product called "Stretch Preferred Stock" to retail investors through platforms like Robinhood (HOOD.US) and Charles Schwab Corp (SCHW.US), advertising its high yield (close to junk bond levels) as an alternative to money market funds. Michael Youngworth, Global Convertible Debt and Preferred Stock Strategy Director at Bank of America Corp, said, "They found an audience. These people trust the 'Strategy Bank.' You need to be able to take risks, but if you can understand it, then this product is indeed attractive to retail investors. This also explains why they can continuously issue." Before the Strategy common stock fell nearly 50% last year, Saylor was able to leverage the premium between the stock price and Bitcoin to finance purchases by issuing shares without causing excessive dilution during a bull market. When this premium almost disappeared, skeptics, including well-known short seller Jim Chanos, began shorting the stock, believing this strategy was unsustainable. The premise of this Bitcoin hoarding strategy is that the cryptocurrency price will continue to rise, attracting more investors unwilling to miss out on gains. If demand decreases, Strategy faces the risk of not being able to continue financing coin purchases, thereby disrupting its "flywheel effect." However, Saylor stated at the Bitcoin 2026 conference held in Las Vegas last week, "At the end of the day, the reason we can do this is because we are not relying on the cash flow of operating businesses for financing." "We do it through capital investment. The key question is, can you achieve an 11.5% return on capital investment in the long term?"