Tech firm Strategy, a pioneer in corporate Bitcoin accumulation, has publicly acknowledged it could sell some of its vast cryptocurrency holdings under specific prolonged market downturns, marking a notable departure from its long-held “never sell” mantra.
CEO Phong Le stated Tuesday the company might be compelled to liquidate part of its Bitcoin if a “sustained three-year bear cycle” materializes. His remarks were made during an interview with Bloomberg TV.
Le’s comments came as he defended Strategy’s recent establishment of a USD $1.44 billion dollar reserve, financed through the sale of company shares.
The primary goal of this new reserve is to reassure investors. Le explained it aims to alleviate concerns that Strategy could be forced to sell its Bitcoin, valued at over USD $59 billion, to cover increasing payments.
“We really don’t want to have to use that Bitcoin at times when the value of our shares is lower than the Bitcoin holdings,” Le said, adding, “Our goal is to pay the dividend in perpetuity.”
This stance contrasts sharply with the historical position of Michael Saylor, Strategy’s enthusiastic founder, whose long-standing mantra has been to “never ever” sell Bitcoin and hold it “forever.”
Le had previously hinted at this possibility in a late November podcast episode. He suggested Strategy might sell Bitcoin to fund preferred stock dividends if a key metric, the “multiple of net asset value” (mNAV), dropped below 1x.
Phong Le, CEO of @MicroStrategy, explains that they would eventually sell Bitcoin instead of #MSTR to fund the dividends on the preferred shares if the mNAV trades below 1x and raising additional capital is difficult because it would be better for the BTC yield. pic.twitter.com/TRn2OedeL1
— Tristan – Blocktrainer.de 🧡⚡️ (@tristanblcktrnr) November 29, 2023
The mNAV metric compares Strategy’s estimated enterprise value to the market value of its Bitcoin holdings. The company aims for its share value to remain above its Bitcoin holdings.
In recent weeks, Strategy’s mNAV has hovered near the 1.0 threshold, briefly dipping below it last month when Bitcoin prices fell towards USD $80,000. An mNAV below 1.0 implies the market values Strategy less than its direct Bitcoin assets.
On Wednesday, the mNAV stood at 1.13, reflecting a 4.63% increase, according to the company’s website.
Despite these developments and investor concerns, Saylor has consistently downplayed the risk of sales. In November, he stated on X that even if Bitcoin returned to Strategy’s average purchase price of approximately USD $74,000, the company’s holdings would still adequately cover its outstanding convertible debt.
Strategy’s shares (MSTR) closed Tuesday up 5.78% at USD $181.33, buoyed by a broader market recovery. However, the stock has fallen nearly 40% this year, outpacing Bitcoin’s own 0.50% decline.
Bitcoin was trading around USD $93,000 at the time of the original report, reflecting a 6.6% increase over 24 hours. Strategy shares saw a further 3.64% rise in pre-market trading Wednesday.
Earlier this week, the company announced its most recent Bitcoin acquisition of 130 BTC for USD $11.7 million, increasing its total cryptocurrency holdings to 650,000 BTC.