Strategy, the world's largest corporate holder of Bitcoin, reported a nearly sevenfold increase in quarterly profit Thursday, thanks to a rebound in Bitcoin prices. But the blockbuster earnings masked a troubling trend: Its Bitcoin holdings are growing, while the amount attributable to each shareholder is shrinking.

In the third quarter, revenue from Strategy's legacy software business fell 2.6% from a year ago to $125.4 million, missing Wall Street estimates of $127.8 million. Earnings jumped to $44.75 a share from $8.42, well above analysts' expectations of $20.19.

Nearly all the profit came from the $21 billion unrealized gain on its Bitcoin holdings, which rose from $3.89 billion a year earlier.

Strategy co-founder and Executive Chairman Michael Saylor said in Thursday's earnings release that the company is "at the beginning of the next bitcoin bull market," citing growing institutional demand and increased adoption by banks.

But accounting profits tell only part of the story. While Strategy increased its Bitcoin holdings by 26% this year, its Bitcoin yield -- a measure of the change in Bitcoin holdings per diluted share -- was negative 3.7% year to date.

That means the amount of Bitcoin attributable to each diluted share has fallen despite the company's growing holdings. Strategy has issued new shares and other securities to raise capital, increasing the number of shares used to calculate the metric.

Shares of Strategy, the company formerly known as MicroStrategy, fell 4% in after-hours trading Thursday.

Strategy's Bitcoin purchases have also slowed. It held 847,666 Bitcoin at September's end, up just 0.2% from June. Meanwhile, the company has spent $2.04 billion this year repurchasing STRC, a class of preferred shares that currently pays a 12% annual dividend.

The buybacks are intended to support STRC's trading price and reduce future dividend costs, but they have diverted money that could otherwise be used to buy Bitcoin. Strategy has also sold $432 million of Bitcoin this year to help pay preferred dividends and repurchase STRC shares, the company said.

Even when Bitcoin prices fall, Strategy must continue paying preferred dividends and interest on its debt. The company has built a $5.07 billion pool of dollar-denominated assets, enough to fund roughly 3.4 years of payments at current rates.

Another threat is looming: MSCI could exclude Strategy from its global indexes under new eligibility rules, potentially triggering billions of dollars in selling by passive investment funds. The index provider is expected to disclose affected companies on Nov. 11.