#What were the recent activities of major corporate Bitcoin buyers?
In June, two significant corporate players in the Bitcoin market, Strategy Inc. and Strive Inc., made substantial acquisitions, amassing a combined total of 6,989 BTC. Rather than relying on traditional methods like stock issuance or debt offerings, these companies opted for a modern financing strategy through preferred equity instruments.
Strategy acquired a net total of 3,625 BTC, while Strive added 3,364 BTC to their holdings. Each company utilized approximately $200 million raised through preferred equity financing, identified as STRC for Strategy and SATA for Strive. This approach distinguished them from conventional corporate finance practices.
#How does preferred equity work in their strategy?
Both Strategy and Strive avoided the typical routes of issuing new common stock or raising credit through revolving lines. Instead, they relied on preferred equity instruments, which are designed to trade around a $100 par value with yields ranging from 11% to 13% or more.
For Strategy, the STRC instrument primarily facilitated their Bitcoin accumulation strategy. There was a minor sale of 32 BTC to cover dividend obligations related to STRC, resulting in the net acquisition figures. In contrast, Strive executed a larger transaction in June, acquiring 2,500 BTC through SATA proceeds, which alone represented about 75% of their total purchases for the month.
#What is their current status in Bitcoin holdings?
As of early June, Strategy’s total Bitcoin holdings surpassed 845,000 BTC, constituting nearly 4% of all Bitcoin available. Strive now holds close to 20,000 BTC. Interestingly, both companies were active buyers during a period where Bitcoin prices fluctuated between $60,000 and $65,000. Their $200 million investments effectively allowed each to procure between 3,000 and 3,500 BTC, aligning well with reported totals.
The almost 7,000 BTC acquired reflects significant market demand, particularly as Bitcoin supply tightens following the halving event in April 2024. Currently, Bitcoin miners produce around 450 BTC daily, which means that collectively, Strategy and Strive absorbed about 15 days’ worth of Bitcoin supply in a single month.
#How does this financing approach affect Bitcoin accumulation?
The yields of 11% to 13% from these preferred equity instruments present manageable costs as long as Bitcoin prices increase. When Bitcoin appreciates faster than the cost of dividends on the preferred equity, companies are benefitting from borrowing at a negative real rate to gather more of a valuable asset.
Strategy’s small BTC sale for dividend obligations illustrates this dynamic, showing how the company is leveraging its Bitcoin reserves to maintain the financing mechanism. This relationship between their Treasury size and financing capabilities creates a strategic advantage as they continue to accumulate Bitcoin.