The largest publicly traded Bitcoin holder says the reserve will cover dividends amid debate over its approach.
Strategy Inc. announced plans on Monday for a $1.44 billion U.S. dollar (USD) reserve – a move that quickly sparked debate among crypto analysts.
Previously known as MicroStrategy, the company holds 650,000 Bitcoin (BTC), making it the largest publicly traded company holding the cryptocurrency. This total includes a recent purchase of 130 BTC for about $11.7 million at roughly $89,960 per coin. Bitcoin is currently trading at $84,932, down sharply from $125,000 in October.
The new USD reserve is intended to cover dividend payments on preferred stock and interest on the company’s debt. Strategy funded it by selling Class A common stock through its at-the-market offering program, according to an official press release.
The company said it plans to keep at least a year’s worth of payments in reserve and may increase that amount depending on market conditions. Founder and Executive Chairman Michael Saylor said the reserve is meant to complement the company’s Bitcoin holdings.
“In recognition of the important role we play in the broader Bitcoin ecosystem, and to further reinforce our commitment to our credit investors and shareholders, we have established a USD Reserve that currently covers 21 months of Dividends,” said Phong Le, President and CEO of Strategy. “We intend to use this reserve to pay our Dividends and grow it over time.”
The move quickly sparked backlash on social media. Jacob King, CEO of SwanDesk, called the decision “hypocritical,” noting that Strategy and Michael Saylor have long promoted Bitcoin while criticizing fiat currency.
“After years of him and the Bitcoin maxis trashing fiat, he’s now launched a fund that buys USD as its reserve asset because Bitcoin is sliding to new lows and putting their whole narrative at risk of blowing up,” King wrote on X. “ It’s the same Ponzi-style behavior I’ve been warning about, and it proves how dependent they actually are on the system they pretend to reject.”
Meanwhile, Austin Campbell, founder of Zero Knowledge Group, argued on X that MSTR is unlikely to collapse completely unless Bitcoin itself fell to zero. He also noted that while taking on debt exposes the company to volatility, its large Bitcoin holdings make a total wipeout highly unlikely.
Strategy’s stock $MSTR is currently trading at $155.97, down 12% for the day and more than 41% over the past month. The decline has coincided with a broader downturn in the cryptocurrency market.
News of the reserve comes around a little over a week after Saylor defended Strategy against concerns that its volatility could lead to removal from major stock indices, including the MSCI USA Index.
At the time, Saylor emphasized that Strategy is an operating company with a $500 million software business and a Bitcoin-backed treasury strategy, rather than a passive fund or holding company.
Saylor’s statement came in response to analysts warning that exclusion from major indices could trigger up to $2.8 billion in passive fund outflows.
