Strategy has paused Bitcoin while simultaneously filling the company’s coffers with cash.
They raised $748 million by selling their own shares (through an "At-The-Market" or ATM equity offering) but did not immediately use that money to purchase more BTC.
This comes after the company announced several massive Bitcoin purchases in a row.
Why does Strategy need a cash reserve?
On Dec. 1, Strategy announced it would build a USD Reserve to cover 12–24 months of interest payments and dividends. They have massive debts, and this cash ensures they can make all their payments even if the stock market or Bitcoin price crashes, without ever being forced to sell a single Bitcoin to pay the bills.
It could potentially allow them to survive crypto winters, proves to creditors that they are solvent and safe
Holding $2.19 billion in cash gives them the flexibility to buy a massive amount of Bitcoin if the price dips suddenly, for instance.
Schiff’s reaction
Gold bug Peter Schiff has interpreted the December announcement as a sign of distress.
His core argument is that Michael Saylor is being forced to sell stock to raise cash for interest payments because he can no longer rely on endless stock price appreciation to fund operations.
“It seems to me that you are building dollar reserves as you realize you will soon need them. Given rising inflation as the Fed cuts rates and continues QE, why not build gold reserves instead of U.S. dollar reserves? That’s what Tether is doing,” he said in a recent social media post.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team