Strategy (MSTR), the largest corporate holder of Bitcoin, is facing questions about the cost-effectiveness of its strategy of raising funds through preferred stock offerings to buy Bitcoin. Research and brokerage firm K33 noted that if Strategy had largely avoided using STRC preferred stock financing this year, retained some of the funds, and used money otherwise spent on buybacks and dividends to purchase Bitcoin, it could theoretically have held 843,303 BTC as of October 12—less than 5,000 BTC below its actual holdings of 848,250. This suggests that the additional Bitcoin acquired through preferred stock financing may not be enough to offset the long-term dividend costs.
K33: STRC financing less effective than expected
In a recent report, Vetle Lunde, head of research at crypto research firm K33, assessed how Strategy’s Bitcoin holdings might change under different financing approaches.
This hypothetical analysis first excludes the approximately $7.5 billion Strategy raised through STRC in the first half of 2026. It then assumes that the $4 billion the company allocated to its USD reserve from May to August, as well as the $1.6 billion used to repurchase STRC, had instead been used to buy Bitcoin directly. K33 also assumes that Strategy could have saved 90% of its STRC dividend payments and used those funds to acquire more Bitcoin.
The calculation keeps MSTR common stock issuance unchanged and uses the average weekly price of Bitcoin. The results show that, as of October 12, Strategy could still have held 843,303 bitcoins under the assumptions above, slightly fewer than the 848,250 it actually holds.
In other words, Strategy’s STRC financing did help the company buy nearly 100,000 bitcoins in the first half of this year, but K33 believes that once financing costs are taken into account, this may not be the most efficient way to allocate capital. Lunde said bluntly that K33’s answer to whether the preferred stock financing model was a mistake is yes.
Annualized dividend expense rises to $1.56 billion
K33 estimates that Strategy’s annual preferred stock dividend expense has now reached $1.56 billion, up from about $830 million earlier this year. The expansion of STRC alone added approximately $725 million to its annual dividend burden.
At a Bitcoin price of $83,000, Lunde estimates that the additional annual dividend cost would be equivalent to approximately 8,740 bitcoins. By comparison, the gap between Strategy’s actual holdings and the amount in K33’s hypothetical scenario is just 4,947 bitcoins. Based on this estimate, the additional dividend cost would offset the difference in holdings between the two scenarios in about seven months.
This also highlights the core issue with the STRC financing model: issuing preferred stock allows Strategy to raise funds without increasing the number of MSTR common shares, but the company must continue paying dividends, creating a long-term cost of capital. If Bitcoin’s price appreciation is insufficient to offset the financing costs, the benefits of using preferred stock to accelerate Bitcoin accumulation may be eroded.
USD reserve can cover dividends, but capital efficiency questioned
Strategy’s USD reserve provides a buffer for preferred stock dividends. K33 estimates that the reserve is enough to cover about 42 months of dividends, reducing the likelihood that the company would be forced to sell Bitcoin due to cash flow pressures.
However, Lunde also questioned the capital efficiency of holding a USD reserve. If the annualized return on the reserve is assumed to be 4% while STRC’s coupon dividend rate is 12%, there is a significant cost gap between the two. In this situation, keeping funds in a reserve account rather than putting them to other uses may entail an additional opportunity cost for Strategy.
K33 therefore believes that, rather than continuing to issue high-dividend preferred stock, Strategy may be able to raise funds more efficiently in the future by issuing additional common stock to buy Bitcoin. However, issuing more common stock would also increase the number of shares outstanding, affecting existing shareholders’ ownership stakes and their Bitcoin exposure per share, so the trade-offs still need to be weighed.
Strategy repurchases STRC and proposes switching to daily dividend payments
Recently, Strategy has repurchased a substantial amount of STRC preferred stock. STRC closed at $99.90 on October 13, slightly below its $100 par value per share.
Additionally, in September, Strategy proposed changing the dividend payment frequency for four types of preferred stock—STRC, STRD, STRF, and STRK—to daily payments. The change still requires shareholder approval, and the company said that adjusting the payment frequency would not increase its existing regular dividend obligations.
Overall, financing Bitcoin accumulation through preferred stock has enabled Strategy to expand its holdings without directly diluting common shareholders, but the rapid rise in dividend payments has made the long-term cost of this financing strategy increasingly apparent. K33’s analysis shows that assessing Strategy’s Bitcoin accumulation strategy requires looking beyond total holdings to also consider the dividend burden, returns on the USD reserve, and the costs of different financing instruments.
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