Strategy Brings Net Leverage Close to Zero as Cash Nearly Covers Convertible Debt

Strategy, the largest publicly traded corporate holder of Bitcoin, has brought its net leverage close to zero after accumulating $6.69 billion in dollar liquidity.

The company calculates net leverage by taking its roughly $6.75 billion in debt, subtracting its dollar assets and dividing the remaining amount by the value of its Bitcoin holdings, which currently stand at about $66 billion.

Over the past several months, Strategy has concentrated on raising capital to expand its U.S. dollar reserves. Those funds help cover approximately $1.7 billion in annual preferred-stock dividends. Its main reserve has grown to $5.1 billion, enough to cover nearly four years of dividend obligations, while a separate $1.59 billion cash pool provides additional flexibility.

Executive Chairman Michael Saylor said the dollar cash strengthens Strategy’s digital credit framework and can be used for a range of corporate purposes, including purchasing Bitcoin, funding preferred dividends and interest payments, repurchasing common or preferred shares, retiring convertible debt and adding to the company’s dollar reserves.

STRC Remains Below Par

Strategy’s variable-rate perpetual preferred stock, STRC, has gained more than 35% from its June low and currently trades around $97.23, still below its $100 par value.

The preferred stock has benefited from Bitcoin’s recovery toward $80,000 as well as Strategy’s continued purchases of STRC shares below par.

The company’s balance sheet also compares favorably with rival Bitcoin treasury firm Strive Asset Management, which has no outstanding debt after eliminating its borrowings earlier this year. The distinction matters because debt holders have priority over preferred shareholders in a company’s capital structure.

Strive’s perpetual preferred stock, SATA, has recovered to its $100 par value, enabling the company to sell additional shares through its at-the-market program last week.

Strategy also reduced its debt obligations in May by repurchasing $1.5 billion of convertible notes scheduled to mature in 2029. Further debt reduction would improve STRC’s position in the capital structure.

For now, continued STRC buybacks, substantial dollar liquidity and Bitcoin’s price recovery could provide the support needed to move the preferred stock closer to its $100 par value.