A 13% dividend is set to force another Bitcoin treasury company into the unthinkable: liquidating its BTC to pay cash
Strive, a Bitcoin treasury company, has retired its standard notes, however its capital construction nonetheless carries a big senior declare forward of frequent shareholders.
SATA is perpetual most well-liked fairness moderately than standard debt. Its cumulative cash dividends rank forward of Strive’s frequent inventory. The company had 7,829,502 SATA shares excellent at June 30, representing a $782.95 million acknowledged quantity and roughly $783 million of combination liquidation desire, in accordance to its Aug. 10 quarterly filing.
Strive’s board maintained SATA’s variable dividend price at 13% for intervals starting on or after Aug. 1. Applying that price to the unchanged June 30 share depend produces roughly $101.8 million of annualized dividends. The determine is a desk calculation, not company steerage, and can change if Strive adjusts the price or points extra most well-liked shares.
Against the $154.9 million of cash and cash equivalents Strive reported as of Aug. 7, that run price implies about 18.3 months of cash-only protection. The ratio is static, not a forecast of when Strive will exhaust its cash. It excludes working wants and inflows, different liquid investments, new financing ,and modifications to SATA’s price or share depend.
Strive reported $26.2 million of most well-liked dividends for the second quarter, however the filed determine was not all cash paid throughout the interval. The company’s statements present about $22.4 million of Q2 cash funds, whereas most well-liked dividends payable elevated by roughly $3.8 million. Together, the figures reconcile to roughly $26.2 million after rounding.
The distinction additionally makes the quarterly whole a poor proxy for a full-quarter run price. SATA’s common fee schedule shifted from month-to-month to every enterprise day on June 16, and the eligible share depend modified as Strive issued shares throughout the quarter. The June 30 share depend subsequently can’t reconstruct the quarter’s combination funds by itself.
Common issuance has already change into a funding channel
Strive held $42.9 million of Strategy’s STRC most well-liked inventory at honest worth as of June 30, alongside 19,864 Bitcoin. By Aug. 7, its Bitcoin holdings had elevated to 20,167 after it acquired 303 Bitcoin, and the company mentioned the holdings have been unencumbered. No post-quarter Bitcoin sale was disclosed in the filings reviewed by means of Aug. 10.
The company has already raised extra frequent fairness. From July 1 by means of Aug. 7, Strive bought 3,415,998 Class A shares for $43 million in gross proceeds, whereas issuing no SATA shares beneath its amended SATA gross sales settlement throughout that interval. Its Class A at-the-market program had about $2.12 billion of remaining capability.
Other levers carry constraints. Strive can reset SATA’s price, however reductions face a SOFR-linked ground and different circumstances. It can usually redeem SATA at $110 or extra plus collected unpaid dividends, an choice that requires cash moderately than eradicating the funding want. Strive’s annual report additionally warns that Bitcoin or associated merchandise may very well be bought to meet future cash-dividend obligations, although that is a danger disclosure moderately than a acknowledged plan.
If SATA issuance beneath the amended gross sales settlement doesn’t resume, current proof factors first to frequent issuance as a result of Strive has already used it. A price change or Bitcoin sale stays conditional. Renewed most well-liked demand would reopen another funding channel and cut back the company’s reliance on frequent gross sales or its Bitcoin reserve.
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