Strategy Inc. Greenlights Selective Bitcoin Sales Amid Compressed mNAV Premium

Strategy Inc., the company behind the popular Bitcoin treasury strategy, has taken a crucial step in its capital management by authorizing a Digital Credit Capital Framework. This framework permits the sale of up to 20,800 BTC, or approximately 2.5% of Strategy's total Bitcoin holdings, but it does not signify that the company is abandoning its long-term strategy.

The framework was approved on June 29th and allows for selective sales of Bitcoin to enhance the balance sheet or provide additional sources of liquidity in support of future capital requirements. The decision marks a change in Strategy's capital management as the premium has shrunk, making issuing new shares at a discount more dilutive.

The company currently holds 847,363 BTC, which cost a total of $64.10 billion, averaging $75,651 per BTC. Bitcoin currently trades at near $60,000, resulting in a paper loss of approximately $8.9 billion.

To alleviate concerns raised by the Rosen Law investigation, Strategy has committed to maintain $2.55 billion in liquid assets and has secured the right to monetize $1.25 billion of its Bitcoin holdings to cover a total of $3.8 billion for preferred dividends and debt service obligations. This liquidity buffer would be enough to cover several years of preferred dividends and interest on outstanding borrowings at today's rates.