Strategy claims its dollar assets have nearly fully offset debt, net leverage down to 0.1%
Strategy claims its dollar assets have nearly fully offset debt, with net leverage down to 0.1%. The company's calculation is: approximately $6.75 billion in convertible bonds minus $6.69 billion in dollar assets, with the difference divided by the market value of Bitcoin reserves.
Dollar liquidity is divided into two parts: $5.1 billion in dollar reserves for preferred stock dividends and interest, covering about four years of annual expenses of approximately $1.7 billion; and a separate cash pool of $1.59 billion, which can be used to buy Bitcoin, pay interest, repurchase common or preferred stock, repay convertible bonds, or increase reserves. The gap is about $60 million.
Bitcoin holdings remain at 840,447 coins, approximately 4% of the total cap, with a total cost of about $63.36 billion and an average price of $75,385. In the recent week, 18,261,118 shares of common stock were sold, netting about $2 billion, during which no Bitcoin was bought or sold: $136.4 million was used to repurchase STRC preferred stock, $300 million was added to reserves, and the remaining approximately $1.59 billion established the cash pool.
In the second quarter, $1.5 billion of 2029 zero-coupon convertible bonds were repurchased at a discount of 20% of face value, reducing debt from $8.2 billion to about $6.7 billion. The mixed coupon rate on convertible bonds is about 0.5%, and the company states there are no traditional secured debts or margin clauses that would force the sale of coins upon price triggers. The scale of preferred stock remains around $15.1 billion, which is not offset in this net leverage formula. STRC has rebounded over 35% from its June low to about $97.23. Reports indicate that common stock surged about 12% that day.
The board has also authorized the sale of up to $5 billion in Bitcoin for reserves, dividends, interest, and stock buybacks; there is also a $1 billion buyback limit for common stock. Executive Chairman Michael Saylor stated that dollar cash strengthens the digital credit capital framework, with separate accounting for Bitcoin treasury purposes.
The buyers are market funds absorbing the newly issued stock, while the sellers are companies converting equity into dollar buffers. Funds are flowing from common stockholders to preferred stockholders and convertible bondholders, with Bitcoin positions unchanged this week. Beneficiaries are creditors and preferred stockholders fearing forced sales; those under pressure are diluted common stockholders. This is a refinancing-driven reduction in leverage numbers, not a reduction in Bitcoin holdings.
Source: Public information
ABAB AI Insight
After rebranding from MicroStrategy to Strategy, the main business has shifted from software to providing market value and credit packaging for Bitcoin positions. Michael Saylor first increased holdings with convertible bonds, then switched to selling common stock as the premium over net assets narrowed, accumulating dollars and changing the strategy from "always increasing holdings" to "first ensuring about $4.82 million in daily cash flow for preferred stock." Small amounts of Bitcoin have been sold for dividends and buybacks since July to August 2026, indicating a shift from a buy-only rule to a relative cost test: when issuing shares at a discount is more expensive than selling coins, coins can also be sold.
The capital path is ATM issuance—preferred stock dividends—discounted repurchase of convertible bonds—layering dollars. The motivation is to remove the narrative of forced sales from valuations, allowing STRC and convertible bond buyers to continue providing cheap duration. Bitcoin remains a core risk asset, with dollars only hedging nominal debt; preferred stock, as a perpetual claim, still sits ahead of common stock. The dilution results in four years of dividend coverage, not a net empty position after deleveraging.
Similar to 2022 when mining companies first hoarded stablecoins under pressure from electricity and debt interest before deciding whether to sell coins, it is also akin to closed-end trusts using cash pockets to appease preferred shares. The industry is transitioning from expansion and hoarding coins to controlling credit: in the open market, Bitcoin treasuries are no longer competing on who buys the most, but on who can avoid defaulting on preferred shares during discounts. Imitators like Metaplanet replicate the issuance machine but cannot replicate the depth of convertible bond buyers in the U.S. market.
At its core, this is capital concentration. The mechanism separates volatile assets and rigid cash outflows into two accounts: coins continue to bear beta, while dollars and issuance bear coupon payments. A net leverage of 0.1% only holds under the definition of "debt minus cash divided by coin price"; preferred stock and the potential future authorization to sell $5 billion in coins represent the true layer above common stock. Whoever can continuously sell equity for dollars can turn the treasury into a bond substitute.
ABAB News · Cognitive Law
Cash aligns with debt; risk is merely layered differently.
Promises not to sell coins cannot compete with daily coupon payments.
Where leverage numbers decline, dilution often occurs first.