The headline number from Strategy’s third-quarter report was not a Bitcoin purchase. Instead, the company reported a $21 billion gain on digital assets while spending over six times as much buying back its own preferred stock.
Between October 1 and 4, Strategy acquired 334 BTC for $28.7 million, an average of $85,838.80 per coin. That pushed its holdings to 848,000 BTC, a new record for the Bitcoin treasury company. It bought nothing in the final three days of September.
The Stock Buyback
Across the same period, Strategy bought back $176.3 million of its Stretch preferred stock through two separate transactions. First, 1,033,168 shares were acquired for $102.6 million in late September. Then, in early October, 740,634 shares were brought in for $73.7 million.
That total included a contribution of $154.1 million from Strategy’s USD Cash balance and $22.2 million from interest earned on cash and short-term investments. The preferred buyback program still holds $547.2 million for spending.
The Sale of Common Stock
Strategy liquidated a portion of its holding, selling 92,894 MSTR shares for $15.7 million in net proceeds that were then invested entirely in Bitcoin. A further $13 million was drawn from USD Cash to fund the acquisition.
None of the four lines it preferred to sell were moved through the at-the-market program during either window. Instead, the company has now directed a great deal of money toward its own stock rather than building up more Bitcoin.
Dollar Balances
The balance sheet’s dollar reserves are divided into two funds: a USD Reserve of $4.88 billion, set aside for preferred dividends and debt interest, and a USD Cash fund of $833.4 million meant for general use. During the week ending October 4, the company withdrew $142.5 million from the reserve to cover those dividend and interest payments.
The firm records Bitcoin at its fair value, which means the $20.91 billion gain comes from the cryptocurrency’s price rising over the quarter. That increase also brings with it an associated deferred tax expense of $1.88 billion.
Cost Basis and the Pattern
The total average cost of the strategy comes to $75,440.70, while the coins purchased just last week were acquired at a price that ran nearly 14% above that figure.
The company is adding Bitcoin above its own basis in small amounts, while directing larger sums at a preferred stock that has traded below its $100 par value for months. The source notes the stock has been a drag on its balance sheet for some time, and the buyback appears aimed at lifting it.
| Transaction | Amount | Date Range |
|---|---|---|
| BTC bought | 334 coins, $28.7 million | Oct 1–4 |
| STRC repurchased | $176.3 million | Sep + Oct |
| MSTR sold | $15.7 million net proceeds | Week to Oct 4 |
Metaplanet’s Comparison
Metaplanet, a fellow Bitcoin treasury firm, also engaged in a similar maneuver during its own third quarter. It sold 10,000 BTC and then repurchased 11,000, staging the transaction to demonstrate to credit rating agencies that it could convert Bitcoin into cash at will.
Now both firms are devoting an equal amount of effort to their credit positions as they do to accumulation. Strategy’s shift was more extensive in scope, and it happened even though the company was already managing a Bitcoin treasury that draws immense attention.
The announcement tweet from Strategy states that the firm controls a balance of 848,000 BTC and $5.7B of USD Assets, directing readers to the link for the complete filing.
It’s ironic that a company founded on accumulating Bitcoin ended up spending far more on its own stock instead. The strategy just broke its own record for Bitcoin holdings.
Source material: “Strategy Posts $21B Q3 Gain, Buys $29M in BTC, Repurchases $176M in STRC,” Decrypt.
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