Strategy Reports $8.2B Q2 Loss as Bitcoin Slump Hits Massive Holdings

The world’s largest corporate Bitcoin holder said it has created a cash buffer capable of covering more than two years of dividend obligations, following investor concerns over its expanding preferred stock structure.

Strategy (MSTR), the largest publicly traded corporate holder of Bitcoin, reported an $8.2 billion net loss for the second quarter on Thursday after the cryptocurrency’s decline significantly reduced the value of its digital asset portfolio.

The quarterly loss was largely attributed to an $8.32 billion unrealized impairment charge on its Bitcoin holdings under fair-value accounting rules.

As of July 26, Strategy owned 843,775 BTC, representing a 25% increase since the beginning of the year. At current market prices, the company’s Bitcoin holdings are valued at approximately $54.8 billion, compared with the $63.7 billion it paid to acquire them.

The earnings report followed increasing scrutiny from investors over whether the company can maintain its increasingly complicated financial structure, which includes multiple preferred stock offerings, common shares, and convertible debt.

During the year, Strategy raised $17.06 billion through at-the-market equity sales, repurchased $1.5 billion worth of convertible notes at an 8% discount, and boosted its U.S. dollar reserve to $3.75 billion. The company said the reserve is sufficient to cover more than two years of preferred dividend payments and interest obligations.

Chief Financial Officer Andrew Kang said the company’s USD reserve currently stands at $3.75 billion, providing coverage for existing preferred dividend and interest commitments for more than 2.1 years.

The company also sold approximately $218.4 million worth of Bitcoin through its newly launched BTC Monetization Program to increase liquidity and support preferred stock dividend payments. The move marked a shift from its previous approach of continuously accumulating Bitcoin without selling any holdings.

Executive Chairman Michael Saylor said Strategy remains committed to growing its “Digital Credit” business despite the recent weakness in Bitcoin prices.

Saylor stated that even amid subdued Bitcoin sentiment and market doubts, the company continues to refine its business model and position Digital Credit as an emerging asset class.

Strategy also introduced a $1 billion stock buyback program for its MSTR common shares, although no repurchases have been made so far. Separately, the company bought back around $25 million worth of STRC preferred shares at a discount to their face value and said it plans to continue purchasing the securities while they remain below par.