Arca chief investment officer Jeff Dorman says Strategy’s Bitcoin accumulation playbook has hit a breaking point, with roughly $15 billion in preferred stock and $1.5 billion in annual dividend obligations now colliding with a weakening cash buffer and softer Bitcoin (BTC) price.
The warning lands after Strategy used most of its cash reserve to buy back $1.5 billion of zero-coupon convertible notes due 2029, leaving $871 million on hand to meet recurring preferred dividend obligations.
The Preferred Stock Problem
MicroStrategy holds 843,738 BTC as of May 25, after building out a preferred stock structure totaling roughly $15.5 billion across STRC, STRK, STRF, and STRD series.
The STRC tranche alone pays a variable dividend the company recently raised to 11.5%.
Dorman argued the issuance was a wager that BTC was about to climb sharply, allowing future Bitcoin sales to fund those dividends.
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Bitcoin instead trades near $72,550, down almost 6% over the past week, weakening the implicit collateral behind that bet.
The Baffling Buyback
In May, Strategy repurchased $1.5 billion face value of its 2029 convertibles for about $1.38 billion in cash, locking in an 8% discount but burning through most of its depleted cash reserve.
The retired notes carried a zero coupon, making the timing of the buyback hard to square with rising dividend obligations.
“MSTR, BTC and Pref holders are really in bind. Someone is going to lose badly here, and it will happen in the next 4 months,” Dorman stated.
Three stakeholder groups now hold competing claims on the same balance sheet.
A potential Bitcoin sale to fund dividends would damage Saylor’s long-term thesis, while cutting payouts would punish preferred holders and raise comparisons to past STRC collapse risk debates.
MicroStrategy’s next capital move will signal which constituency comes first.
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