Strategy needs to pay $689M a year to not sell bitcoin

Strategy (formerly MicroStrategy), the world’s largest Digital Asset Treasury (DAT) company, has an ambitious plan to never sell any of its Bitcoin (BTC) holdings. However, this decision comes with substantial annual costs currently amounting to $689 million and rapidly increasing. These costs include cash obligations such as coupons to debtholders, dividends to preferred shareholders, and operating expenses related to running its business. Additionally, there are cash obligations for product support, subscriptions, and potential tax liabilities in the future.

To maintain strong returns for its preferred shareholders, Strategy is working to avoid tax obligations and preserve its Return of Capital (ROC) dividend tax status. As of October 24, 2025, the company faced $689 million in annual dividend and debt interest expenses, which are predicted to grow to billions of dollars in the coming years. Founder Michael Saylor has set aggressive BTC yield targets for 2025 and beyond, which will likely add more dividend obligations due to ongoing acquisitions.

To achieve a positive BTC yield, Strategy focuses on accreting additional BTC per MSTR share on a dilution-adjusted basis. As of October 24, 2025, the company reported a year-to-date BTC yield of 26.1% and aims to achieve 30% by the end of the year. For future acquisitions, Strategy plans to sell preferred shares such as STRK, STRF, STRD, STRC, or STRE, allowing it to purchase billions of dollars worth of additional BTC without immediate dilution. However, these acquisitions increase dividend obligations, which require additional capital. Unfortunately, as a traditional business, Strategy generates minimal revenue to meet these obligations.

From January 1, 2025, to October 24, 2025, Strategy reported operating income of $12 billion, most of which came from the unrealized appreciation of its BTC holdings. In contrast, it generated less than $355 million in total revenues during the same period. To sustain its treasury without selling BTC, the company primarily relies on selling additional equities (common and preferred stocks) while avoiding debt issuance. During its Q3 earnings call, the company announced plans to eventually equitize its existing debt, prioritizing equity sales over debt due to their flexibility in avoiding fixed repayment obligations.

The multiple-to-Net Asset Value (mNAV) is a critical metric that measures the premium shareholders are willing to pay for MSTR relative to its BTC holdings. Investors remain optimistic about Strategy’s ability to use its large treasury to accrete additional BTC per share. As of now, investors are paying a 7% premium (or 1.07x mNAV) per MSTR share above the company’s BTC holdings. After accounting for the company’s enterprise value, this premium increases to 30% (or 1.3x mNAV). Despite not having any legal claim to Strategy’s BTC holdings, investors trust the management team, led by Michael Saylor, to honor their commitments.

The costs of not selling BTC are rapidly increasing for Strategy. Since Q3 2020, the company has continued to acquire BTC every quarter and plans to persist indefinitely. However, these acquisitions come at a steep cost, with annual dividend obligations already nearing $700 million and projected to rise into the billions. This strategy of continuous BTC accumulation puts immense pressure on the company’s ability to manage its treasury efficiently while delivering shareholder value.