Strategy CEO: $14 billion in reserves can alleviate selling pressure; future plans may include BTC lending.
TL;DR
Strategy CEO Phong Le announced a $1.4 billion reserve fund to cover dividends and avoid forced Bitcoin sales during market volatility. The fund, raised via stock offering, can support up to two years of payments, and the company may consider Bitcoin lending for extra revenue.
Tags
According to ChainCatcher, Strategy CEO Phong Le stated that the company's newly established $1.4 billion dividend reserve fund can be used to pay dividends and interest during market volatility, helping to avoid being forced to sell Bitcoin due to short-term funding needs.
The reserve, raised through a stock offering, is expected to cover approximately 21 months of dividend payments, with a potential extension of up to two years, allowing the company to avoid using its approximately $59 billion Bitcoin holdings. Le stated that the company does not want to sell BTC when its valuation is below the value of its Bitcoin assets, aiming to "permanently continue paying dividends." To mitigate the risk of being forced to sell its Bitcoin, the company may even consider lending some of its Bitcoin in the future to generate additional revenue. He noted that Bitcoin lending is becoming a viable option as more traditional financial institutions enter the field.
Since transitioning to a Bitcoin balance sheet model in 2020, Strategy has experienced significant stock price increases and corrections. Currently, the company's mNAV is approximately 1.17, raising market concerns about the risk of asset value inversion. This latest move is seen as a response strategy to the pressure on its digital asset treasury model.