Financing model under scrutiny again! Strategy (MSTR.US) continues to increase its holdings of Bitcoin for the third consecutive week, selling common stocks as the main source of funding.

Major Bitcoin holder Strategy (MSTR.US) continues to increase its Bitcoin holdings. According to documents submitted to the U.S. Securities and Exchange Commission (SEC) on Monday, the company purchased 520 bitcoins between June 15 and June 21, worth approximately $39.4 million. This marks the third consecutive week that Strategy has increased its Bitcoin holdings. It is worth noting that the funds for this purchase came entirely from the sale of Class A common stock, rather than the company's previously heavily promoted perpetual preferred stock financing instrument. This means that at a time when the preferred stock financing model was facing market scrutiny, Strategy has once again turned to traditional equity financing channels to support its Bitcoin investments. The documents show that following the latest purchase of bitcoins, Strategy's Bitcoin reserves have further increased, allowing the company to use its reserve funds to increase by approximately $300 million to $1.4 billion. As the publicly traded company with the most Bitcoin holdings globally, Strategy has been following a strategy of "financing to buy bitcoins and holding for the long term" in recent years. Company co-founder and Chairman Michael Saylor has long been one of the most steadfast supporters of the "never sell Bitcoin" narrative in the cryptocurrency market. However, earlier this month, Strategy disclosed the sale of 32 bitcoins, attracting widespread market attention. This was the company's first sale of bitcoins since 2022. Although the sale size was almost negligible compared to its roughly $5.7 billion worth of Bitcoin holdings, this move was seen as a significant signal as it broke Saylor's long-standing narrative of "only buying, never selling." At the time, the market widely believed that the company's move was aimed at showing investors that it was willing to use Bitcoin assets to support preferred stock dividends when necessary. However, this move instead raised concerns in the market about the sustainability of its financing model. To mitigate the dilutive impact of continued issuance of common stock on existing shareholders, Strategy began issuing permanent preferred stock on a large scale starting in 2025. The most notable of these is the Stretch Preferred Shares (STRC.US) preferred stock product. Under the design, Strategy issues STRC preferred stock with a face value of $100 per share, using the funds raised immediately to purchase Bitcoin, and investors receive over a 10% annual dividend return. Currently, the company offers an 11.5% annualized return for these preferred shares and has repeatedly increased dividend levels to attract inflows of capital. However, this financing model is facing increasing pressure. Since the ex-dividend date of May 15, the market price of STRC has not been able to return above the $100 face value level. As the preferred stock continues to trade at a discount, Strategy is actually raising funds at a higher than expected financing cost. Last week, the closing price of STRC fell below $90, well below the issuance face value. This means that the model of raising funds by issuing preferred stock and then buying Bitcoin is facing challenges. To maintain this model in the long run, the rate of increase in the price of Bitcoin must be faster than the growth rate of the company's preferred stock liabilities, otherwise the efficiency of the financing will continue to decline. Strategy's recent reliance on equity financing may reflect management's cautious attitude towards the current demand for preferred stock in the market. At the same time, investors are also closely watching whether the company will further sell Bitcoin to meet future dividend payment and capital structure management needs. As of the time of writing, Strategy's stock price has risen by 2.81%, to $115.66. However, the stock has accumulated a decline of nearly 70% over the past year. During the same period, the price of Bitcoin has risen by about 2.4%, to around $65,300, but is still down by approximately 37% from a year ago.