Strategy (MSTR.US) sets up a reserve of 1.4 billion US dollars to protect Bitcoin in the future or try a lending model

The Zhitong Finance App learned that Strategy (MSTR.US) CEO Phong Le said that the company's newly established reserve of 1.4 billion US dollars provided the Bitcoin giant with flexibility to meet short-term debts such as dividend payments and interest repayment during periods of market turmoil.

The move was aimed at allaying investors' concerns — the market had previously feared that Strategy might be forced to sell Bitcoin due to increasing payments. Raised through stock issuance, the reserve allows the company to secure a 21-month dividend payment buffer period (which can be extended up to 2 years) without having to liquidate its Bitcoin holdings worth $59 billion.

“We never want to be forced to use these bitcoins when the value of the company's equity falls below the value of its Bitcoin holdings,” Le said in an interview on Tuesday. “Our goal is to achieve sustainable dividend payments.”

This statement reflects the company's core concern: if the market values its business less than the value of its assets, it may force the company to sell Bitcoin at a discount. To avoid this situation, Strategy is even considering lending a portion of Bitcoin — a shift that highlights the once aggressive “buy and hold” model that has been drastically adjusted under pressure.

“As traditional financial institutions enter this space and we have more counterparties, lending Bitcoin is an option we will consider, and I think we are positive about it,” he said.

Strategy was originally an enterprise software company, but until 2020, co-founder and chairman Michael Saylor made the astonishing decision to turn the company's cash reserves into Bitcoin investments, citing the erosive effects of inflation, a move that caused an uproar on Wall Street.

At first, most market watchers saw it as an exception, but as the price of Bitcoin soared, the company, formerly known as MicroStrategy, became a favorite of speculative investors — who wanted to participate in Bitcoin investments in a convenient way. Its stock price then became a phenomenal example of the market: after the strategic transformation, the peak increase was over 3,500%, outperforming all stock indices.

However, since hitting an all-time high in November 2024, the company's stock price has dropped by about 60%. Reasons include the decline of the cryptocurrency boom after the presidential election, and more companies imitating the digital asset treasury model Saylor pioneered.

According to the official website data, the company's key valuation indicator, MNaV (which compares the ratio of corporate value to its Bitcoin holding value), was around 1.17 on Tuesday, causing investors to worry that it may soon turn negative. Le hinted in a podcast last week that if this were to happen, selling some bitcoins might be the company's last resort.

Strategy's latest move comes as more and more cracks appear in the broader digital asset treasury model. This financial engineering model has been praised for blending cryptocurrency beliefs with open market channels, but as Bitcoin's price plummets and market risk appetite cools down, the model is gradually disintegrating. The leveraged market cycle that once worked — raising capital, buying cryptocurrencies, and profiting from trends — is now unsustainable under market pressure.

Strategy shares closed up nearly 6% on Tuesday, and as of press time, Bitcoin's price had risen more than 2% to around $93,000.