Michael Saylor”s Strategy has announced the formation of a substantial U.S. dollar reserve totaling $1.44 billion, a move aimed at bolstering the company”s financial stability as it navigates the turbulent waters of the cryptocurrency market. This reserve is designed to cover approximately 21 months of dividend and interest obligations, marking a significant step in the company”s strategy as it seeks to solidify its position as the largest “Bitcoin Treasury Company” globally.
As part of its strategy, the company revealed that it currently holds 650,000 Bitcoin (BTC), representing about 3.1% of the total eventual supply. The establishment of the USD Reserve is expected to enhance liquidity, allowing the company to meet dividend payments and interest commitments even amid fluctuating digital asset prices.
Michael Saylor, the company”s founder and Executive Chairman, emphasized that this reserve is a critical component of their evolution, enhancing their ability to manage short-term market volatility while adhering to their vision of becoming the leading issuer of Digital Credit. The reserve was funded through ongoing at-the-market stock sales, and the firm aims to maintain a coverage of at least 12 months of dividend obligations, with plans to extend that coverage to 24 months or more as needed.
In conjunction with this development, Strategy has updated its fiscal year 2025 earnings guidance, responding to the recent downturn in Bitcoin prices. The company anticipates operating income could range from a loss of $7.0 billion to a profit of $9.5 billion, depending on whether Bitcoin ends 2025 priced between $85,000 and $110,000. Net income projections reflect a similar range, with potential losses of $5.5 billion to gains of $6.3 billion, while diluted earnings per share may fluctuate between a loss of $17.0 and earnings of $19.0 per share.
These projections hinge on the successful execution of planned capital raises that would enable the company to meet its Bitcoin yield targets for 2025. Strategy now expects its Bitcoin yield for the year to fall between 22.0% and 26.0%, anticipating dollar gains from Bitcoin between $8.4 billion and $12.8 billion. Achieving these goals will rely on a combination of preferred stock offerings, disciplined equity issuance, and ongoing Bitcoin accumulation.
The announcement has drawn criticism from some market observers, notably Bitcoin skeptic Peter Schiff, who expressed his concerns on social media. Schiff contended that the creation of the USD Reserve signifies a troubling shift for Strategy, suggesting that Saylor”s firm is now reliant on selling stock to fund its obligations rather than investing in Bitcoin. He labeled the business model as “broken” and accused Saylor of misleading investors.
As Strategy continues to navigate the complexities of the cryptocurrency landscape, its recent initiatives highlight the ongoing challenges and opportunities that companies face in balancing innovation with financial sustainability.
