Crypto
28 Oct 2025
Read 15 min
How MicroStrategy funds bitcoin purchases and why it matters
How MicroStrategy funds bitcoin purchases using preferred stock ATM programs to grow its BTC treasury.
MicroStrategy keeps adding bitcoin using a flexible funding playbook. How MicroStrategy funds bitcoin purchases blends at-the-market (ATM) stock sales, multiple lines of perpetual preferred stock, and convertible notes. This mix lets the company buy steadily, even when markets are choppy, while tailoring dividend and conversion features to different investor groups.
MicroStrategy (now branded as “Strategy” in filings and press) bought another 390 BTC between Oct. 20 and Oct. 26 for about $43.4 million at an average price of $111,117. That pushes its holdings to 640,808 BTC, worth roughly $74 billion at a recent price near $115,379. The average cost basis sits at $74,032 per bitcoin, or about $47.4 billion total including fees. That implies paper gains of around $26.6 billion and represents more than 3% of Bitcoin’s eventual 21 million supply. The company signaled the fresh buys ahead of time with the now familiar “orange dot day” tease on social media, and shares moved higher in pre-market trading after the disclosure.
191,404 STRK shares for about $17 million, with $20.35 billion still available in that ATM program.
175,634 STRF shares for $19.4 million, with $1.67 billion remaining.
87,462 STRD shares for $7 million, with $4.14 billion remaining.
No shares of Class A common (MSTR) or STRC were sold during the week. Remaining capacity sits near $15.91 billion for MSTR and $4.2 billion for STRC.
This staged selling pattern shows the core of how MicroStrategy funds bitcoin purchases: it taps whichever instrument offers the best blend of price, speed, and investor demand at the time, and directs the money into BTC with minimal delay.
Marathon Digital (MARA) with 53,250 BTC.
Twenty One (Tether-backed) with 43,514 BTC.
Metaplanet with 30,823 BTC.
Bitcoin Standard Treasury Company (linked to Adam Back and Cantor Fitzgerald) with 30,021 BTC.
Together, these four do not match MicroStrategy’s total. The gap suggests that any shifts in MicroStrategy’s buying rhythm can ripple through the market narrative.
Sell into strength when investor demand is present.
Avoid the delays and discounts of large block offerings.
Match issuance pace to daily liquidity.
Reduce execution risk and keep transaction costs lower.
By cycling proceeds into bitcoin quickly, the company preserves its dollar-cost-averaging behavior. That is why the public can often expect new “orange dot day” updates during busy issuance weeks.
Convertible vs. non-convertible: balance between future dilution and lower coupon cost.
Cumulative vs. non-cumulative: manage cash flow commitments across cycles.
Fixed vs. variable: align payouts with the rate environment.
This menu approach helps keep the cost of capital competitive while maintaining investor interest across different risk profiles.
Increase the perceived floor of demand during risk-off periods.
Lead other corporates to study similar playbooks.
Support the long-term narrative of bitcoin as a treasury reserve asset.
But the effect cuts both ways. If the company were to pause or change course, that shift could dent confidence, especially when the price is near key levels. For now, consistent disclosures and weekly issuance data points reduce uncertainty.
Demand for preferred stock lines and achievable coupon levels.
Remaining ATM capacity across STRK, STRF, STRD, and STRC.
Timing of convertible issuance and conversion triggers.
mNAV trends versus recent history.
Correlation to bitcoin during drawdowns.
Bitcoin price risk: a sharp, prolonged drawdown would pressure NAV and sentiment.
Funding market risk: weaker demand for new issues could raise costs or slow purchases.
Dividend pressure: cumulative obligations (e.g., STRF) increase cash needs over time.
Dilution risk: repeated equity or convertible issuance can weigh on per-share metrics.
Regulatory and disclosure risk: changes to securities or crypto rules could affect issuance or holdings strategy.
Liquidity risk: during stressed markets, issuing at scale may be harder or more expensive.
Weekly or periodic 8-K filings that show fresh purchases and issuance activity.
Updates on remaining ATM capacity across each preferred line.
Shifts in the “42/42” plan, including pace, mix, and targeted instruments.
mNAV movements versus BTC and peer premiums/discounts.
Signals from management, including “orange dot day” posts that often preface buys.
Broader adoption trends among corporates building bitcoin treasuries.
Understanding how MicroStrategy funds bitcoin purchases helps investors read these signals. Issuance pace and instrument choice often foreshadow the intensity of near-term buying.
How MicroStrategy funds bitcoin purchases
MicroStrategy’s approach starts with capacity. The company has several ATM programs that let it sell securities into the market quickly when conditions are favorable. Proceeds then go straight into bitcoin. The company’s current toolkit includes four perpetual preferred stock lines and past use of common equity and convertible notes. Management also adopted a long-term capital plan it calls “42/42,” a target to raise a combined $84 billion in equity and convertibles through 2027, up from an earlier $42 billion “21/21” plan. The aim is simple: keep dry powder available to buy bitcoin on a rolling basis.Preferred stock lines: one toolkit, four flavors
MicroStrategy uses four types of perpetual preferreds to reach different investors. Each line has distinct terms that affect cost, risk, and upside.STRK: Convertible, 8% non-cumulative dividend
STRK offers a pathway to equity upside because it is convertible, paired with an 8% non-cumulative dividend. For investors who want potential appreciation and can live with a dividend that does not accrue if skipped, STRK is the “growth-ish” option. For the company, STRK balances cost of capital with future flexibility.STRF: Non-convertible, 10% cumulative dividend
STRF pays a 10% cumulative dividend and does not convert. If MicroStrategy defers payments, dividends accrue and must be made up. STRF tends to appeal to income-focused holders who want a defined stream of payments. For the company, it is a more conservative instrument that can command demand even in cautious markets.STRD: Non-convertible, 10% non-cumulative dividend
STRD pays 10% but is non-cumulative, so missed dividends do not pile up. It also does not convert. That structure creates the highest risk-reward profile among the preferreds: higher stated yield, less obligation carryover. It can be attractive when investors want yield now and accept the uncertainty of future payments.STRC: Variable-rate, cumulative, paid monthly
STRC offers a variable, cumulative dividend with monthly payments and a design intended to keep trading near par. For MicroStrategy, this can serve as a flexible bridge instrument, aligning payout levels with market rates while maintaining investor comfort through monthly cash flow.What the latest week looked like
In the last reported week, MicroStrategy sold:Scale, persistence, and why it matters
In bitcoin terms, MicroStrategy is in a league of its own. At more than 640,000 BTC, it now controls over 3% of the eventual supply. That hoard changes the conversation about corporate treasuries and digital assets, and it also shapes liquidity expectations. The company does not just buy on dips; it buys on schedule. That steady bid, funded by securities issuance, is a structural source of demand for bitcoin. Other public entities continue to build their treasuries, but from a smaller base. The latest rankings show:Market valuation versus net asset value
Despite the larger holdings, the stock has not kept up with bitcoin in 2025. MSTR finished last week up 3.5% but remains down about 3.7% year-to-date, while bitcoin is up around 23.4%. From the summer peak, the stock is off roughly 37%. That drawdown pulled the company’s market cap-to-NAV (mNAV) ratio close to 1.1, much lower than earlier premiums. A lower premium can make the shares more sensitive to both bitcoin’s price and to issuance headlines. When MicroStrategy sells more securities to finance buys, the market often weighs potential dilution and dividend obligations against the added bitcoin per share.Balance sheet resilience by design
Co-founder and executive chairman Michael Saylor says the capital structure is built to withstand extreme stress, including a hypothetical 90% drop in bitcoin that lasts four to five years. The mix of equity, convertibles, and preferreds—together with the non-cumulative features on some lines—gives management options to conserve cash if needed. Still, Saylor has admitted shareholders would “suffer” in that scenario. Dividends, dilution, and sentiment would all come into play.Mechanics that support continuous buying
The repeated use of ATM programs is key. ATMs allow the company to:Why multiple preferred lines help
A single funding source rarely fits all markets. The four preferred lines let MicroStrategy tune its trade-offs:How this compares to peers
Most public companies with bitcoin treasuries rely on free cash flow, mining revenue (for miners), or periodic equity raises. MicroStrategy has professionalized the “treasury-as-a-service” model by institutionalizing issuance and building a large-capacity pipeline. The “42/42” ambition signals intent to keep buying for years, regardless of short-term volatility. While peers add measured amounts, MicroStrategy’s cadence and scale can shape market psychology and perceived scarcity.Implications for bitcoin
MicroStrategy’s steady purchases can:What it means for shareholders
Investors in MSTR should track both the bitcoin per share and the cost of capital. New issuances change share count, dividend obligations, and potential future conversion. When bitcoin rises faster than dilution, NAV grows and can lift the stock. When bitcoin stalls, the market may focus on dividends, issuance cadence, and the premium to NAV. Key moving parts include:Risks to watch
What to watch next
The bottom line
MicroStrategy has turned bitcoin accumulation into a standing corporate process. The company issues securities when windows are open, channels proceeds into BTC, and repeats. It manages cost, risk, and flexibility by rotating across four preferred lines and other capital tools. This structure supports steady accumulation and has made the company a major force in the market. The approach does not eliminate risk. Shareholders must weigh dilution, dividend commitments, and bitcoin volatility against the potential upside from a growing treasury. Yet as long as the company maintains capacity and market access, it can continue adding BTC through different cycles. That is why prospective investors, bitcoin holders, and rivals study how MicroStrategy funds bitcoin purchases—and why each “orange dot day” still moves the conversation.(Source: https://www.theblock.co/post/376239/its-orange-dot-day-michael-saylors-strategy-buys-more-bitcoin)
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FAQ
Q: What funding instruments does MicroStrategy use to buy bitcoin?
A: How MicroStrategy funds bitcoin purchases blends at-the-market (ATM) stock sales, multiple lines of perpetual preferred stock, and convertible notes. The company channels ATM proceeds and other issuance directly into bitcoin so it can buy steadily even in choppy markets.
Q: How many bitcoins does MicroStrategy hold and what is its cost basis?
A: MicroStrategy holds 640,808 BTC, worth roughly $74 billion at a recent price near $115,379, and its average cost basis is $74,032 per bitcoin for a total cost of about $47.4 billion including fees. That implies around $26.6 billion of paper gains and represents more than 3% of Bitcoin’s 21 million supply.
Q: How do STRK, STRF, STRD and STRC preferred stock lines differ?
A: STRK is convertible with an 8% non‑cumulative dividend, STRF is non‑convertible with a 10% cumulative dividend, STRD is non‑convertible with a 10% non‑cumulative dividend, and STRC is a variable‑rate, cumulative preferred that pays monthly. These different terms let MicroStrategy attract a range of investor types while managing cost of capital, cash flow obligations, and dilution risk.
Q: What are ATM programs and why does MicroStrategy use them?
A: ATM programs allow the company to sell securities into the market quickly when investor demand is present and then deploy proceeds into bitcoin. MicroStrategy uses ATMs to avoid delays and discounts from large block offerings, match issuance pace to daily liquidity, and reduce execution risk while preserving dollar‑cost‑averaging.
Q: What is the “42/42” plan and how does it support the company’s buying strategy?
A: The “42/42” plan targets $84 billion in combined equity offerings and convertible notes through 2027, up from an earlier $42 billion “21/21” plan. The larger target is intended to maintain capacity and “dry powder” so MicroStrategy can sustain regular purchases over the long term regardless of short‑term volatility.
Q: What risks should shareholders monitor related to this funding approach?
A: Key risks include bitcoin price declines, weaker demand for new issuances that could raise costs or slow purchases, cumulative dividend obligations on some preferreds, dilution from repeated equity or convertible issuance, regulatory or disclosure changes, and liquidity strain in stressed markets. Shareholders should watch issuance cadence, dividend commitments, and mNAV trends to see how those risks affect per‑share economics.
Q: How does MicroStrategy’s approach compare with other public bitcoin treasury companies?
A: Many peers rely on free cash flow, mining revenue, or occasional equity raises, whereas MicroStrategy has institutionalized a “treasury‑as‑a‑service” model with standing ATM programs and multiple preferred lines. Its scale and cadence give it a structural buying role that can influence market psychology and perceived scarcity more than smaller treasuries.
Q: How can investors track future bitcoin purchases and funding activity from MicroStrategy?
A: Investors can follow periodic 8‑K filings that disclose fresh purchases and issuance, monitor remaining ATM capacity across preferred lines, and watch management signals such as the company’s “orange dot day” updates. Tracking weekly issuance data and mNAV movements versus bitcoin can help anticipate the intensity and impact of near‑term buying.
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