Strategy’s BTC Breakeven ARR: How 3.3% Annual Gain Supports Dividend Sustainability]

Michael Saylor, co-founder and executive chairman of Strategy, defended the company’s financial strategy amid growing criticism over its recent shift from holding Bitcoin indefinitely to actively selling portions of its reserves to fund dividend payments.

Saylor argues that most critics have misunderstood Strategy’s BTC Breakeven Annual Return Rate (ARR) metric. According to the executive, the company requires only a modest annual appreciation in Bitcoin’s price to sustain its dividend obligations moving forward.

Where is the Flak Coming From?

Strategy recently introduced its Digital Credit Capital Framework, which allows the company to sell Bitcoin at its discretion to build cash reserves, pay dividends, settle interest on preferred shares, and fund share repurchases. This framework has drawn criticism from analysts who point out that the company has been selling Bitcoin below its average purchase price of approximately $75,476 per coin.

The company executed a significant sale over the past week, offloading 3,588 BTC for roughly $216 million, raising concerns about its ability to maintain high dividend payments—particularly given the STRC preferred share’s dividend rate increase to 12% in July.

Only 3.3% Price Appreciation Annually Needed for Strategy’s Bitcoin Holdings

Saylor emphasizes that critics often overlook or misunderstand Strategy’s BTC Breakeven ARR calculation. The company defines this metric as the assumed annualized rate of return on Bitcoin expressed as a percentage.

The formula is straightforward:

BTC Breakeven ARR = Annual Preferred Dividends / Total Value of BTC Reserves

As of Wednesday morning (UTC), Strategy’s BTC Breakeven ARR stands at 3.33%, based on annual dividends of $1.763 billion and BTC reserves valued at $52.87 billion at the prevailing exchange rate of $62,658 per BTC.

Saylor maintains that as long as Bitcoin appreciates faster than 3.3% annually over time, the resulting capital gains can fund dividends indefinitely, including those on STRC.

Veteran investor Peter Schiff, chairman of SchiffGold, challenged this projection, noting that Strategy’s calculation assumes dividend payments remain static over time. However, many observers countered that Schiff overlooks the fact that dividend obligations would only increase if Strategy expands its Bitcoin holdings—an inherent aspect of the company’s strategy.

Additionally, supporters point out that Bitcoin’s historical annualized returns have consistently exceeded Saylor’s conservative 3.3% benchmark, suggesting the asset can accommodate future dividend scaling initiatives.