Strategy's dollar reserves climbed to $4.65 billion, up from $3.75 billion two weeks earlier, as the company sold nearly 7,000 Bitcoin since late June. The cash is earmarked to support its Digital Credit preferred securities, which carry fixed dollar dividend obligations. But the strategy comes with a real cost: every dollar parked in cash is a dollar not working in Bitcoin.
Why the cash pile is growing
Strategy holds cash primarily to back its issuance of Digital Credit, preferred securities tied to Bitcoin. S&P slapped a B- rating on the company in October 2025, citing Bitcoin concentration, weak dollar liquidity, and very weak risk-adjusted capital. The rating agency's methodology effectively excludes Bitcoin from the capital base because of its market risk. Holding cash can improve that rating, broaden investor demand, and potentially lower the cost of capital. So the company is selling BTC to build a buffer.
The math gets ugly
The trade-off is straightforward. Issue $100 of preferred stock at a 10% annual dividend, and three years of dividend coverage requires a $30 cash reserve. That leaves only $70 for Bitcoin. The effective hurdle rate jumps to 14.29% — a 42.9% increase. And Bitcoin's volatility drag makes it worse, because dividends must be paid even in down years. Cash provides optionality, sure, but it's expensive optionality.
Buying back preferred below par
Strategy has been using some of that cash to retire its own preferred stock at a discount. In late July, it paid $25 million for $28.89 million of STRC stated value, a 13.47% discount. Then it used $108.6 million from Bitcoin sales to retire 1.15 million STRC shares. Buying preferred below par removes senior claims and future dividend obligations for less than the cash spent, which is accretive to Net Bitcoin Per Share. That part of the strategy works.
The open question
For most Bitcoin companies, cash needs should be tied to operating expenses — payroll, taxes, debt service. Strategy's reserve is a different animal, built to satisfy rating agencies and credit investors. But the company doesn't know exactly how much it needs to achieve a better rating or attract more credit investors. That uncertainty is the crux. The cash pile is growing, but the target is a moving one.
