Strategy (MSTR.US), the bitcoin treasury company led by Michael Saylor, has announced a comprehensive reform of the financing model that has been a core pillar of its bitcoin strategy. As this structure, which has fueled its aggressive accumulation for years, comes under increasing pressure, the company has granted itself broader authority to sell the cryptocurrency, repurchase securities, and maintain liquidity for adaptation.

The firm stated it might sell up to $1.25 billion worth of bitcoin to bolster its cash reserves and has established separate repurchase programs of up to $1 billion each for its common and preferred stock. Strategy also indicated it will become more disciplined in issuing common shares, particularly when its stock price is at or near the value of its bitcoin holdings. Its common shares rose approximately 5% in early trading.

Bohan Jiang, a senior derivatives trader at FalconX, commented, "While this introduces more selling pressure for bitcoin, it is absolutely positive for the stock and for common and preferred shareholders. They are essentially saying 'we will support shareholders by selling bitcoin.'"

Strategy's common and preferred shares have plummeted alongside bitcoin, undermining its multi-year financing advantage—a mechanism that previously allowed Saylor to issue securities and deploy the proceeds into larger bitcoin purchases. This sell-off has sparked growing questions about whether this self-reinforcing financing model, which underpins the company's bitcoin strategy, can continue to function during a prolonged downturn.

The company is now shifting away from its primary reliance on issuing new securities to fund larger bitcoin purchases. Instead, it is granting itself greater flexibility to maintain liquidity, repurchase discounted securities, and monetize bitcoin when the appeal of raising new funds diminishes. The board has also established a policy to maintain a minimum cash reserve equivalent to at least 12 months of expected preferred stock dividend payments and interest expenses.

Strategy reported that, following the sale of common stock last week, its reserve currently stands at $2.55 billion. It also raised the dividend rate on its STRC preferred stock to 12%.

Last Friday, a valuation metric that once supported the bull case turned negative, indicating the company's financing edge has evaporated. Strategy's mNAV—the ratio of its enterprise value, including debt and preferred stock, to the value of its bitcoin holdings—fell below parity (1.0). The stock has declined nearly 80% over the past year.

The timing is particularly significant because demand for bitcoin has become increasingly reliant on institutional buyers like Strategy. As concerns mount about the company's ability to continue raising funds on favorable terms, investors are reassessing not only Saylor's acquisition strategy but also one of the cryptocurrency's largest sources of new demand.

In early June, Strategy disclosed it had sold 32 bitcoins, its first sale since 2022. While minuscule relative to its roughly $51 billion holdings, the symbolic significance was substantial. For years, Saylor built Strategy around a simple core premise: raise funds to buy bitcoin and never sell. This disclosure challenged that narrative and intensified the sell-off that has rattled the crypto world.

The move appeared designed to signal that, as the largest corporate holder of the cryptocurrency, it was willing to use bitcoin to support dividend payments on its preferred stock debt. However, it instead raised new doubts about the sustainability of the structure.

The perpetual preferred stock that Strategy began issuing in 2025 once provided Saylor a way to continue buying bitcoin without penalizing common shareholders. However, the price of that preferred stock has crashed to below $75, far below the $100 par value threshold necessary to avoid making Strategy's purchases unprofitable.