Strategy, Inc. (MSTR), Michael Saylor's listed bitcoin treasury company, introduced a new capital framework that gives it room to sell Bitcoin (BTC), raise cash reserves and buy back securities after its mNAV fell below one.
The company said in a post on X on 29 Jun that its Digital Credit Capital Framework is designed to strengthen its preferred securities, enhance liquidity and preserve long-term bitcoin exposure. The update came after Strategy's mNAV dropped to 0.98, down 3.0%, according to the company's website as of 12:05UTC.
The drop is a significant milestone for Saylor's bitcoin treasury model. mNAV measures Strategy's enterprise value relative to the value of its bitcoin holdings. A reading below one means the market values the company at less than the net value implied by its bitcoin position and related capital structure.
Strategy shares gapped up to $85.55 at the New York open from Friday's close of $82.16, but quickly retraced. At 14:20UTC, MSTR was trading at around $83.90.
Digital credit support
Strategy said it increased its USD Reserve to $2.55bn, representing 17.4 months of dividend coverage. The reserve may be used only for dividends and interest expense, and will be maintained at a minimum of 12 months.
The company also raised the dividend rate on STRC, its variable rate perpetual stretch preferred stock, by 50 basis points to 12% for July record dates. Strategy said its corporate objective is for STRC to trade over time at $99 to $100.
STRC has continued to trade well below that level. Last week's pressure centred on STRC after it fell nearly 19% below its $100 reference value, as Strategy's common shares dropped 9.4% and bitcoin traded near a two-year low.
The sell-off intensified questions over whether preferred securities could keep supporting Strategy's bitcoin acquisition model, especially after the company sold 32 BTC between 26 and 31 May – disclosed in an 8-K filing on 1 Jun – to fund preferred stock dividend payments, its first bitcoin sale since 2022.
Strategy also established repurchase programmes of up to $1bn for its Digital Credit securities and up to $1bn for its common stock. It said buybacks would not be funded from the USD Reserve.
Bitcoin model faces new test
The most significant element of the framework is the BTC Monetization Program. Strategy said it may sell bitcoin to fund the USD Reserve, dividends and interest expense, and repurchases of Digital Credit securities or common shares.
The programme includes a $1.25bn cap for reserve-building. Combined with the $2.55bn USD Reserve, Strategy said it now has $3.80bn of dividend coverage, equivalent to 25.9 months.
The framework marks a shift in tone. Strategy has long framed bitcoin accumulation as its central corporate strategy, and the May BTC sale – its first since 2022 – had already tested that narrative.
Strategy said it expects to remain disciplined in issuing common shares, particularly when the stock trades at or near 1x mNAV. That restraint reflects the central tension now facing digital asset treasury companies: when equity trades at a premium to bitcoin holdings, share issuance can fund further purchases; when the premium disappears, expansion becomes harder without dilution, asset sales or higher-cost financing.
The mNAV breach lays bare the fragility at the heart of the bitcoin treasury model. Strategy's entire capital structure depended on its shares trading at a premium to its bitcoin holdings – a premium that justified issuing more shares to buy more bitcoin. Now that premium is gone, the company is left selling bitcoin to service obligations that were supposed to be funded by buying it.
(Updated with opening price and movement post-New York open on 29 Jun).
