Strategy’s Bitcoin Machine Needs Just 2.05% Annual Gains to Pay Dividends — But Only If the Price Keeps Climbing

Strategy can cover its preferred dividends indefinitely if bitcoin appreciates at a rate exceeding 2.05% annually. That threshold powers the engine behind its relentless bitcoin buying — and exposes the fragility baked into its financial model.

The STRC preferred equity product provides the capital for continued bitcoin purchases, drawing hundreds of millions in inflows around its recent ex-dividend date. As long as investor appetite holds, the company keeps buying. Michael Saylor signaled an imminent purchase on Sunday with a 'think bigger' post, a phrase that has preceded every major acquisition since 2020.

Strategy has made 105 bitcoin purchases since August 2020, with the most recent adding 4,871 BTC for $329.8 million on April 6. Total holdings now stand at 766,970 BTC, acquired at a blended cost basis of $75,644 per coin. At Monday’s price of $71,800, the company sits on $14.5 billion in unrealized losses — a figure disclosed in its first-quarter SEC filing.

Yet the math still works — for now. A 2.05% annual return threshold is low relative to bitcoin’s historical performance. But it assumes uninterrupted growth. If bitcoin enters a prolonged period of stagnation or decline, the dividends keep compounding while the asset backing them falters.

The imbalance is stark. Strategy accumulated 46,233 BTC in March, nearly three times the 16,200 BTC newly mined globally that month. At this pace, the next filing could push holdings past 800,000 BTC before the end of April. The machine runs only as long as the price climbs.