MicroStrategy proceeded with its second Bitcoin sale this year, offloading 3,588 BTC between late June and early July to generate funds for dividend distributions on its digital credit securities, including STRC stock. This transaction marks the company’s largest crypto sale to date.
According to SEC filings, the first tranche of the sale between June 29 and 30 involved 1,363 BTC for approximately $80.8 million, while the second phase from July 1 to 5 contributed another 2,225 BTC for $135.2 million. Despite these sales, MicroStrategy still holds a significant Bitcoin reserve of 843,775 BTC and maintains $2.55 billion in USD reserves.
The company’s decision aligns with previously reported plans to potentially sell up to $1.25 billion worth of Bitcoin under its digital credit framework. The STRC stock, representing these credit securities, currently trades below its $100 par value but saw a slight uptick following Binance’s launch of 24/7 trading for the security, moving to around $88 in premarket trading.
MicroStrategy’s common stock, MSTR, however, did not experience share sales or repurchases during this period, and the stock declined close to 2% in premarket trading, trading near $98. This contrasts with the STRC stock’s modest gains amid recent market activity.
The SEC filing also revealed a substantial valuation hit on the company’s Bitcoin holdings, disclosing an $8.32 billion loss for the quarter ending June 30. This included an $8.31 billion unrealized loss and a $900 million realized loss, driven by Bitcoin’s fair market value falling below MicroStrategy’s cost basis. The company’s BTC carrying value stood at $49.67 billion as of June 30.
Consequently, MicroStrategy must record a valuation allowance against deferred tax benefits and assets linked to the unrealized losses on Bitcoin. The broader market reaction reflected a decline in Bitcoin’s price, which dropped over 2% to near $61,700 following the announcement.