The Bitcoin Powerhouse Strategy is spending $739.8 million in cash at an average price of $118,940 per coin, and $739.8 million in cash, according to a July 21 SEC filing.
The latest acquisition represents 13.82 days’ worth of new Bitcoin supply.
Meanwhile, the latest purchase brought the strategy’s total Bitcoin holdings to 607,770 BTC, and was acquired at around $436.1 billion at an average cost of $71,756 per coin. At current market prices, the company’s Bitcoin Treasury is valued at $72 billion, with an unrealized profit of nearly $28 billion.
The strategy said it sold 1.64 million shares of MSTR shares to fund the purchase, raising approximately $736.4 million. The company also disclosed minor sales of STRK, STRF and STRD shares, raising $3.9 million.
Strategic Copycat Warning
As more companies adopt Strategy’s Bitcoin Treasury Playbook, some analysts are beginning to warn about potential downsides in the movement.
James Check, the lead analyst at CheckonChain, warned in a July 21 post on X that companies with aggressive Bitcoin strategies could be directed towards trouble. He described this risk as similar to enduring “a 2012 Bitcoin grade drawdown in gold grade period.”
He said some companies may already be at their peak, with their stock premiums being over-expanded to levels that do not recover.
If such a scenario occurs, he said those companies would do the following:
“It will either be taken over or sell BTC and buy back the shares.”
His concerns reflect the concerns of Matthew Sigel, head of Vaneck’s digital asset research.
In a June 16th post on X, he criticized the widespread use of market (ATM) offerings to fund Bitcoin purchases.
According to Sigel, a company can issue new shares to profits if the stock far exceeds the value of the underlying asset known as the value of the stock asset (NAV). This approach allows them to raise funds more efficiently, as seen in Michael Saylor’s strategy.
However, this approach has limitations. If the stock price slips near the NAV, issuing additional shares no longer creates value. Instead, it dilutes existing shareholders and weakens investment cases.
To mitigate these risks, Sigel recommended suspending the ATM program when stock trading is 0.95 times lower for 10 days.
He also advised that executive compensation should be linked to growth per NAV, rather than BTC accumulation or she accounts.