Strategy Swung to Loss as Bitcoin Valuation Reversed
The company’s bitcoin holdings reached 843,775 as of July 26.
Strategy (MSTR), the bitcoin treasury company, swung to a second-quarter loss as an unrealized digital-asset loss reversed the prior year’s gain. The company posted an $8.33 billion operating loss, compared with $14.03 billion of operating income a year earlier, though the loss narrowed from $14.47 billion in the first quarter.
The reversal reflected an $8.32 billion unrealized digital-asset loss, compared with a $14.05 billion unrealized gain a year earlier. Strategy’s net loss was $8.22 billion, or $24.45 a diluted share, against income of $10.02 billion, or $32.60 a share; the first-quarter loss was $12.54 billion, or $38.25 a share.
Second-quarter revenue rose 6.9% from a year earlier to $122.4 million, slowing from 11.9% growth in the first quarter. Revenue declined about 1.5% sequentially, while gross margin narrowed to 66.6% from 68.8% a year earlier and 67.1% in the first quarter.
Strategy continued to add bitcoin while its year-to-date return metrics weakened. Holdings increased about 3.1% from May 3 and 18.3% from Feb. 1, but BTC Yield fell to 4.5% as of July 26 from 13.3% on May 25. A methodology change effective Jan. 1 limited comparison with figures reported under its previous approach.
The company accelerated its capital raising to support that expansion. Year-to-date proceeds from at-the-market programs reached $17.06 billion, up about 46% from May 3, with second-quarter proceeds led by $5.47 billion from STRC and $2.95 billion from MSTR. Its USD Reserve expanded to $3.75 billion, covering 2.1 years of dividend and interest obligations, from $871 million on May 25.
That funding carried a growing claim on common earnings. Preferred-stock dividends charged against common earnings rose to $400.7 million from $49.1 million a year earlier, contributing to an $8.62 billion loss attributable to common stockholders. Strategy increased STRC’s annualized dividend rate to 12.00% in July and shifted payments to a semi-monthly schedule.
Strategy also reduced convertible-note principal by $1.50 billion after repurchasing 2029 notes for about $1.38 billion, an 8% discount to par. The company introduced two $1.0 billion repurchase programs and bought $25.0 million of STRC at a discount, while making no MSTR repurchases.
The company added another source of dividend funding through a new BTC Monetization Program, selling about $218.4 million of bitcoin year to date. Strategy reported a 10.8% BTC Hurdle ARR as its effective cost of credit, placing the financing burden alongside bitcoin accumulation at the center of its capital strategy.