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K33 Research said Strategy’s issuance of STRC preferred stock, introduced to avoid diluting common shareholders, ended up creating a heavy dividend burden and produced more drawbacks than benefits.
According to a K33 report, Strategy’s annual dividend obligations surged to $1.56 billion as its STRC program expanded, with $725 million of that tied to additional STRC issuance. At a Bitcoin price of $83,000, that amounts to an annual cost of about 8,740 BTC. K33 added that if Strategy had not issued preferred stock and had instead used its $4 billion cash reserve and the funds spent on STRC purchases to buy Bitcoin, the difference in its current Bitcoin holdings would be only around 4,900 BTC. Factoring in STRC’s 12% interest cost against a 4% return on cash reserves, K33 said buying Bitcoin through common stock issuance would have been more efficient and criticized the preferred stock-based financing model.