Strive enters top 10 Bitcoin reserve companies, why is it paying to buy MicroStrategy preferred stock?

Founded by Vivek Ramaswamy, the Bitcoin reserve company Strive (stock ticker: ASST) has increased its Bitcoin holdings again, reaching a total of 13,627.9 coins, successfully ranking among the top ten publicly listed Bitcoin reserve companies worldwide. However, alongside this expansion strategy, its Q4 financial report revealed significant losses. Strive also invested $50 million in Strategy’s STRC, which, compared to its own issued SATA, generates a 1.25% “negative spread,” raising market concerns about potential losses.

Strive Actively Expands Bitcoin Reserves and Enters Top Ten

Recently, Strive has been actively expanding its digital asset portfolio through capital markets. In the latest move, the company purchased 317 Bitcoin, bringing its total holdings to 13,627.9 coins, officially surpassing its peers to become the tenth-largest publicly traded Bitcoin holder globally. Since going public, Strive has accumulated assets through multiple channels, including private equity investments (PIPE), mergers and acquisitions, and subsequent public market offerings. This reflects a clear corporate strategy to view Bitcoin as a core “inventory asset,” aiming to hedge against inflation and depreciation of traditional fiat currencies, while attracting institutional investors who prefer exposure to cryptocurrencies.

Bitcoin Price Drop Revaluation and $200 Million Loss in Q4

Despite the continuous increase in Bitcoin holdings, Strive’s Q4 financials showed substantial losses. The net loss for the quarter, calculated under Generally Accepted Accounting Principles (GAAP), was $393.6 million; of the $208.2 million adjusted net loss, about $194.5 million (93%) was due to fair value revaluation losses caused by falling Bitcoin prices. Under current accounting standards, companies must immediately reflect digital asset price fluctuations in their income statements. This means that even if the company does not sell Bitcoin, short-term market price adjustments can significantly impact reported profits.

Perpetual Preferred Stock SATA with 12.75% Dividend Rate

To support its large Bitcoin purchasing plans, Strive issued perpetual preferred stock SATA, similar to MicroStrategy, to raise funds, positioning it as a high-yield investment backed by Bitcoin. Recently, the dividend rate was increased to 12.75%. CEO Matthew Cole stated that the company will focus on expanding its “digital credit strategy,” aiming to generate long-term returns superior to simply holding Bitcoin while maintaining a healthy balance sheet.

Buying STRC at a 1.25% Loss — What’s the Point?

Strive also invested $50 million in Strategy’s STRC, which offers an 11.5% dividend yield. Paying high interest to raise funds and buy low-yield assets results in a 1.25% “negative spread,” raising concerns about potential losses.

Although purchasing STRC results in an approximate 1.25% book negative spread, this asset provides a stable cash yield of up to 11.5%. For Strive, which issues the SATA preferred stock with a 12.75% dividend, maintaining such high payouts requires substantial and ongoing cash reserves. Holding STRC allows Strive to obtain predictable external cash flows to partially cover dividend obligations. This approach reduces the risk of having to sell core Bitcoin assets to pay dividends during Bitcoin price downturns or market liquidity crunches. Essentially, this 1.25% spread is viewed as a “liquidity insurance premium” to maintain reserve integrity.

Based on current data, SATA has approximately 4.27 million shares outstanding, while only 500,000 shares of STRC were purchased, suggesting that Strive’s move may be more symbolic, possibly signaling an alliance with MicroStrategy.

ASST Rises Sharply Then Falls Back to $10

Last year, digital asset finance companies (DAT) surged, with ASST’s stock price rising from $12 to a peak of $260. Within less than a year, the stock plummeted back to $10.26.

This article, “Strive Enters Top Ten Bitcoin Reserves, Loses Money on MicroStrategy Preferred Stock,” first appeared on Chain News ABMedia.