K33 says Strategy's preferred stock deals may cost the company Bitcoin

K33 questions whether preferred stock was the right call

Research firm K33 argues that Strategy's use of its STRC preferred shares to raise money for Bitcoin purchases has likely cost the company thousands of BTC compared to other financing options.

According to K33, Strategy held 848,250 BTC as of Oct. 12. But under a hypothetical scenario where the company avoided using STRC preferred stock, it would have held 843,303 BTC on the same date.

Vetle Lunde, K33's head of research, concluded that the preferred stock model was a mistake. "Was the pref model a mistake? We believe the answer to that question is yes," he wrote in a report.

How much Bitcoin could be at stake

• Strategy's annual preferred dividend obligations reached $1.56 billion, up from about $830 million earlier this year.
• The expansion of STRC added roughly $725 million to those annual dividend payments.
• At $83,000 per BTC, the extra dividend costs equal about 8,740 BTC per year.
• Strategy currently holds only 4,947 BTC more than K33's hypothetical scenario predicts.
• K33 estimates the dividend costs could erase that difference in roughly seven months.

What the calculation assumes

K33 built its hypothetical scenario by removing the roughly $7.5 billion Strategy raised through STRC in the first half of 2026. The firm then assumed the $4 billion Strategy set aside for its dollar reserve from May to August and the $1.6 billion used for STRC buybacks were instead spent buying Bitcoin.

K33 also assumed Strategy would have avoided 90% of its STRC dividend payments and used the savings for Bitcoin purchases. The calculation kept MSTR share issuance unchanged and used weekly average Bitcoin prices.

Strategy's dollar reserve and dividend options

Strategy maintains a dollar reserve that K33 estimates could cover about 42 months of dividend payments. This reduces the likelihood that the company would need to sell Bitcoin to meet obligations.

However, Lunde questioned whether holding that much cash makes sense. He noted the dollar reserve is earning around 4% while the STRC preferred shares carry a 12% coupon rate. He argued that issuing common stock would be a more efficient way to fund future Bitcoin purchases.

In recent weeks, Strategy has been buying back STRC shares heavily. The stock closed at $99.90 on Oct. 13, just below its $100 par value.

The company also proposed moving STRC and three other preferred stocks to daily dividend payments in September. That change still requires shareholder approval, and Strategy said it would not increase its regular dividend obligations as a result.

Why this matters for Strategy's Bitcoin strategy

Strategy has built its corporate identity around accumulating Bitcoin. The preferred stock approach allowed it to raise billions without diluting existing shareholders through common stock issuance. But K33's analysis suggests the dividend burden of that financing may ultimately cost the company more Bitcoin than it helped acquire.

Bitcoin traded at $82,863 on Wednesday, down 0.3% for the day, according to The Block.

What's confirmed and what remains unclear

Confirmed: Strategy held 848,250 BTC as of Oct. 12. Its annual preferred dividend obligations rose to $1.56 billion. STRC expanded added an estimated $725 million in annual dividends. Strategy raised approximately $7.5 billion through STRC in the first half of 2026.

Unconfirmed: K33's hypothetical BTC balance is based on several assumptions about how Strategy would have used its capital under different financing. Whether common stock issuance would truly be more efficient remains a matter of debate. Strategy has not responded publicly to K33's analysis.

• The Block