The originator of Bitcoin reserve strategy, Strategy (formerly known as MicroStrategy), announced that it will issue another $4.2 billion of preferred stock STRD. The three preferred stocks issued by MicroStrategy, STRD, STRF and STRK, are marked with quarterly dividends, allowing you to have a stable cash flow. What are the differences between the three preferred stocks? How to invest?
Table of Contents
ToggleWhat is the difference between STRD, STRF and STRK?
Strategy has previously issued preferred shares of STRF and STRK, of which STRK has the feature of being convertible into common stock MSTR, so the dividend is 8%, slightly lower than STRF and STRD. ABMedia has compiled the differences between the three in the following table:
STRF enjoys a 10% annual dividend, paid quarterly. If the current dividend is not paid, the unpaid portion will be accumulated as "compounded dividends", and the annual interest rate will increase by 100 basis points (i.e. 1%) each quarter on the basis of the original 10%, up to a maximum annual interest rate of 18%.
The last STRD issued also has a 10% annual dividend, but the dividend is not cumulative, which means that the company can decide not to distribute dividends, and will not make up for it later. STRD has a lower repayment priority and the conditions are obviously worse than the original STRF.
How do STRD, STRF, and STRK perform?
Strategy issued STRK (yellow line in the figure below) at the end of January with an issue price of US$80. It has now risen to US$120.4, a six-month increase of 51%.
The STRF (green line in the figure below) issued in March had an issue price of US$85 and has now risen to US$117.7, an increase of 38%.
The STRD (orange line in the figure below) was issued at the beginning of June at an issue price of US$85. It has now risen to US$95.3, an increase of 12%.
Enjoy dividends and have the opportunity to earn price difference
Taiwanese investors prefer to invest in "high dividend" stocks with cash flow. Generally, stocks with a dividend of more than 5% are considered good targets. MicroStrategy's three preferred stocks pay dividends quarterly. The dividends are calculated based on the par value of 100, with a dividend rate of 8% to 10%. However, the 30% tax withheld by the US government must be deducted. The annualized interest that investors can actually get is about 5.6% to 7%, which is actually much better than ordinary stocks.
ABMedia has also helped everyone calculate the various purchase prices and the relative dividend rates. Although a 30% tax rate will be deducted, the annualized return is still more than 5%. If you can choose to enter the market at the initial issuance or at a low price when the stock price falls, you can not only earn a fixed dividend, but also enjoy the capital gains from the increase. Unless the company goes bankrupt, there will be no dividend.
Investors can purchase through overseas brokerage firms or domestic re-trust accounts. The process is just like buying and selling ordinary stocks, which is very convenient.
| Dividend rate before/after tax | STRK | STRF | STRD |
| The purchase price is 100 | 8%/5.6% | 10%/7% | 10%/7% |
| The purchase price is 110 | 7.3%/5.1% | 9.1%/6.4% | 9.1%/6.4% |
| The purchase price is 120 | 6.7%/4.7% | 8.3%/5.8% | 8.3%/5.8% |
Risk Warning
Cryptocurrency investment carries a high degree of risk. Its price may fluctuate drastically and you may lose all your capital. Please assess the risk carefully.
Bitcoin miner Bit Digital recently announced a major adjustment to its asset allocation strategy, turning to Ethereum, and expanding its holdings to more than 100,000 ETH in a short period of time, which attracted great attention from the market. As soon as the news came out, the stock price soared 29% in a single day, and the market value returned to more than US$1 billion. However, some analysts pointed out that Bit Digital's current valuation is still far below its true value.
Table of Contents
ToggleBit Digital bought a large amount of ETH and became the second largest ETH holding company
According to the official announcement , Bit Digital (NASDAQ: BTBT) announced yesterday that it has completed its transition to an Ethereum reserve strategy, raising approximately US$172 million to purchase ETH and investing the 280 BTC that had been sold into the purchase of ETH .
As of the end of the first quarter, Bit Digital held only 24,434 ETH, but now it has surged to 100,603, with a total market value of approximately $257 million. According to CoinGecko's unupdated data, the company's ETH holdings will approach Coinbase by then, making it the second largest listed company in terms of Ethereum holdings.
This strategic shift shows the company’s high confidence in the Ethereum ecosystem. CEO Sam Tabar said: “BTBT has now fully transformed into an Ethereum financial reserve company and is committed to becoming the world’s most representative ETH holding company.”
We believe that Ethereum has the ability to rewrite the entire financial system. Ethereum's programmability, growing adoption rate, and staking yield model represent the future of digital assets.
Enterprises embrace cryptocurrency reserve strategies, and institutions begin to take an interest in ETH?
The trend of companies incorporating crypto assets into their balance sheets continues to heat up . In the past month alone, more than 21 institutions have added new Bitcoin holdings. Among them, the leading MicroStrategy (MSTR) currently holds up to 597,000 BTC.
However, compared with BTC, institutions are still conservative in their allocation to ETH. But the market atmosphere seems to be changing recently, and the US ETH ETF has recorded net inflows for seven consecutive weeks, indicating that institutions are gradually increasing their interest in ETH.
Matthew Sigel: BTBT is underestimated by the market, and its HPC business has become a golden goose
Matthew Sigel, head of digital assets at VanEck, expressed his opinion that BTBT’s current valuation may be significantly underestimated: “BTBT’s current market value is approximately US$1 billion, of which ETH assets account for approximately US$257 million, but its cloud and high-performance computing (HPC) business WhiteFiber has greater explosive potential.”
Sigel estimates that WhiteFiber's annual recurring revenue (ARR) could reach $150 million by 2026. Even if we consider scale and liquidity, WhiteFiber is still worth $1.01 billion at a 75% discount to its peer NBIS's 9x ARR valuation. In other words, the market has not yet reflected the value of its ETH assets.
To put this in perspective, if ETH is valued at 2x NAV (~$514M), then WhiteFiber is trading at just 3.3x ARR compared to NBIS’s 9x:
BTBT has now applied for an IPO to spin off WhiteFiber, which could help unlock this multiple and valuation.
ETH reserve companies are flourishing: Is BTBT a bet or an opportunity?
In the context of the crypto market still being volatile, the "All in ETH" strategy adopted by Bit Digital is undoubtedly a high-risk gamble, but it is also a strong statement on the future status of Ethereum. Previously, BitMine, a Bitcoin miner led by Tom Lee, a well-known Wall Street strategist and co-founder of the financial research institution Fundstrat, also switched from BTC to ETH, trying to create a micro-strategy in the Ethereum world.
With WhiteFiber's successful listing and reasonable pricing, and ETH reserve companies becoming a new trend, BTBT's dual business structure (mining + cloud business) is expected to open up space for market value revaluation and generate imagination for future stock prices.
Risk Warning
Cryptocurrency investment carries a high degree of risk. Its price may fluctuate drastically and you may lose all your capital. Please assess the risk carefully.
