Michael Saylor is once again playing professor, taking to X to air his thoughts regarding MSTR yesterday:

“One of the most misunderstood MSTR metrics is BTC Breakeven ARR. If BTC appreciates faster than 3.3% over time, BTC capital gains can fund STRC dividends indefinitely.”

Image source: X

Critics argue the company’s growing stack of preferred stock dividends will eventually force it to liquidate its bitcoin treasury. Saylor’s counter is arithmetic, i.e. as long as bitcoin’s long-run annual growth beats a low single-digit hurdle, the appreciation on more than 840,000 BTC generates more value than the dividends consume.

BTC Breakeven ARR (annualized rate of return) is the minimum average yearly bitcoin appreciation needed for the company’s bitcoin gains to cover its preferred dividend obligations without issuing new common shares.

Saylor has looked at it differently, telling clients to view it as a sustainability gauge for the entire model, previously noting that the company tracks the figure in real time on its website. In an earlier post, he pegged the threshold at around 2.05%, writing that above that level Strategy could cover its dividends “indefinitely without issuing new MSTR shares.”

Image source: X

The hurdle has risen to 3.3% as Strategy’s preferred obligations have grown and bitcoin’s price has retreated. The company now faces roughly $1.5 billion in annual dividend payments across its five preferred instruments, a sum that dwarfs the roughly $477 million in revenue its software business generated in 2025, according to Grayscale research that described the setup as a cash-flow challenge rather than a bitcoin one.

STRC (Variable Rate Series A Perpetual Stretch Preferred Stock) sits at the center of that structure and is engineered to trade near a $100 par value. It has grown into the world’s largest preferred stock by market value at more than $8.5 billion (offering a variable monthly dividend that is the single biggest recurring claim on Strategy’s cash).

Saylor’s math faced its first real-world test this month as Strategy sold 3,588 BTC for about $216 million between June 29 and July 5 to fund preferred dividends, trimming holdings to roughly 843,775 BTC. The disposal followed Saylor’s own warning that the company would likely sell bitcoin to cover STRC payouts, and it marked the definitive end of his years-long “never sell” mantra.

Subsequently, Cryptoquant founder Ki Young Ju has warned that investor boredom could sink STRC if demand for the preferred shares fades. At the same time, JPMorgan analysts said formalizing bitcoin sales introduces two-way risk into crypto markets.

Saylor himself has explained that liquidating about 1.4% of assets annually could fund the dividends even in a flat market.

That said, both sides agree on one thing: the 3.3% threshold is remarkably low by bitcoin’s historical standards. The asset has compounded at double-digit annual rates over every multi-year period in its history, though it has also delivered drawdowns exceeding 70% along the way (and it is those stretches, when gains vanish and dividends still come due, that force sales at unfavorable prices).

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