Strategy (MSTR.US) sets aside $1.4 billion in reserves to safeguard Bitcoin, may try a lending model in the future.

Strategy (MSTR.US) CEO Phong Le stated that the company's newly established $1.4 billion reserve provides flexibility for the Bitcoin giant to meet short-term debts such as dividend payments and interest repayments during market volatility. This move aims to alleviate investor concerns - previously worried that Strategy may be forced to sell Bitcoin due to increasing payments. The reserve was raised through stock issuance and allows the company a 21-month buffer period for dividend payments (extendable to two years), without having to liquidate its $59 billion worth of Bitcoin holdings. "We never want to be forced to use these Bitcoins when the equity value of the company falls below the value of the Bitcoin holdings," Le said in an interview on Tuesday. "Our goal is to sustainably pay dividends." This statement reflects the core concern of the company: if the market values its business lower than the asset value, it may force the company to sell Bitcoin at a discount. To avoid this situation, Strategy is even considering lending out some Bitcoin - this shift highlights that the once radical "buy and hold" strategy has made significant adjustments under pressure. "When traditional Financial Institutions, Inc. enter this field, and we have more counterparts, lending out Bitcoin is an option we will consider, and I believe we are positive about it," he said. Originally a corporate software company, Strategy transformed in 2020 when co-founder and chairman Michael Saylor made the startling decision to shift the company's cash reserves to Bitcoin investments, citing the erosive impact of inflation. Initially seen as an exception by many market observers, with the skyrocketing Bitcoin prices, this former MicroStrategy company became a darling of speculative investors - who hoped to participate in Bitcoin investment quickly. Its stock price then became a market phenomenon - with a peak increase of over 3500% after the strategic transformation, outperforming all stock indices. However, since hitting a historic high in November 2024, the company's stock price has dropped by about 60%. Reasons include the waning cryptocurrency craze after the presidential election, and more companies emulating Saylor's digital asset treasury model. According to official data, the company's key valuation metric - mNAV (the ratio of enterprise value to its Bitcoin holdings) was around 1.17 on Tuesday, causing concerns among investors that it could quickly turn negative. Le hinted last week on a podcast that if this were to happen, selling some Bitcoin might become the company's last resort. As Strategy's latest move comes at a time when the broader digital asset treasury model is showing more cracks. This financial engineering model was once highly praised for merging cryptocurrency beliefs with public market channels, but as Bitcoin prices plummet and market risk appetite cools, the model is gradually crumbling. The once effective leveraged market cycle - raising funds, buying cryptocurrencies, profiting from trends - is now struggling under market pressure. On Tuesday, Strategy's stock rose nearly 6%, while at the time of writing, the price of Bitcoin had risen by over 2%, to around $93,000.