Phong Le, the CEO of Strategy, explained that the decision to establish a $1.44 billion reserve was aimed at easing investor worries about the company's stability during a downturn in Bitcoin prices. During an appearance on CNBC’s Power Lunch, Le emphasized the company's integral role in the crypto and Bitcoin ecosystems, which motivated their recent efforts to raise capital and bolster their balance sheet with US dollars to combat fear, uncertainty, and doubt (FUD).
On Monday, Strategy revealed the creation of this reserve, which was funded through a stock sale. The reserve is designed to ensure the company can cover at least 12 months of dividend payments, with plans to eventually extend this to a 24-month coverage period. This move came in response to concerns about the company's ability to meet its debt and dividend commitments if its stock price were to drop significantly.
Le stated that the company was not in danger of defaulting on dividend payments or being forced to liquidate their Bitcoin holdings, despite the circulating FUD suggesting otherwise. He noted that within just eight and a half days, Strategy successfully raised $1.44 billion, equivalent to 21 months' worth of dividend obligations. This achievement was not only intended to dispel the FUD but also to demonstrate that the company can secure funding even during a Bitcoin downcycle.
Additionally, Le mentioned that Strategy would contemplate selling Bitcoin only if the stock value fell below its net asset value and new capital became inaccessible. The company has also introduced a "BTC Credit" dashboard, indicating that they have sufficient assets to cover dividend payments for over 70 years.