Written by: Allard Peng

Translated by: AIdidiaoJP, Foresight News

Strategy (formerly MicroStrategy) has seen its dollar cash reserves soar to 4.65 billion dollars, up from 3.75 billion dollars just two weeks ago. Meanwhile, it has sold nearly 7,000 Bitcoins since the end of June 2026.

When this number came out, the entire crypto community was buzzing. Why would a company that has embedded "hoarding Bitcoin" in its DNA and has bet almost all its assets on BTC suddenly start hoarding fiat currency on a large scale? More critically, should other Bitcoin treasury-related companies follow suit?

This is not a simple "should or shouldn't" question. It involves credit rating, capital structure, opportunity cost, volatility risk, and the true positioning of Bitcoin companies' business models. Today, we will peel back the truth layer by layer.

Why is Strategy so stubborn about dollars? Because it has taken a path that few others have been able to traverse

Strategy now resembles less of a traditional software company and more like a "digital credit" issuance platform. The preferred securities it issues are essentially backed by a massive Bitcoin balance sheet. These securities carry fixed dollar dividend obligations—regardless of Bitcoin's rise and fall, dividends must be paid in dollars on time.

Here's the problem: Bitcoin itself does not generate any cash flow. While Strategy's software business still exists, the cash generated is far from enough to cover its increasingly large capital structure.

Worse yet is the traditional credit analysis system. In October 2025, S&P rated Strategy at B-, stating very frankly: an excessively high concentration of Bitcoin, insufficient dollar liquidity, and extremely weak risk-adjusted capital. According to S&P's methodology, Bitcoin is almost directly excluded from "effective capital" due to market volatility risk—in their eyes, no matter how much BTC one holds, it equates to zero.

When we previously analyzed this rating report, we noted that if the company wanted to improve its credit rating, cash reserves were one direction worth serious consideration.

So, Strategy chose to hold a large amount of dollars. The purpose is very straightforward—to support its capacity to continuously issue digital credit. More dollar liquidity makes the preferred securities appear more "secure" in the eyes of investors and rating agencies, thereby expanding demand and reducing financing costs.

But cash is not a free lunch. Excess capital should generate returns. Ordinary companies can reinvest it, buy back shares, or distribute dividends. For Bitcoin companies, the most direct choice is to buy more Bitcoins. Every dollar in cash sitting on the balance sheet means you forfeit the potential positive returns of Bitcoin in exchange for a certain negative real return (due to inflation erosion).

Strategy is willing to take this hit because its business model is already tied to "continually issuing loans." Three extremely specific conditions exist simultaneously:

• Bitcoin nearly dominates the entire balance sheet;
• Rating agencies impose heavy penalties for Bitcoin exposure;
• Management is determined to continue large-scale issuance of digital credit.

Each of these three conditions is special enough individually, but together they create a situation where "cash hoarding is necessary." Conversely, if Strategy did not issue loans, it wouldn't need these dollars at all.

The real cost of cash reserves: "Invisible tax" calculated by mathematics

Let's get straight to the numbers and calculate the drag clearly.

Assuming Strategy issues 100 dollars of preferred stock with a 10% annual dividend rate. To cover three years of dividends, it must set aside 30 dollars in cash, leaving only 70 dollars to invest in Bitcoin.

Every year, it still has to pay 10 dollars in dividends. Therefore, this 70-dollar Bitcoin investment must yield at least:

10 ÷ 70 = 14.29%

The originally claimed 10% cost of capital instantly becomes a threshold return rate of 14.29% on the capital actually deployed. Cash reserves directly raise the return requirement by 42.9%.

Cash itself can earn a bit of interest, slightly alleviating this figure, but the structural drag cannot disappear.

The real threshold is actually even higher. Bitcoin is highly volatile, with some years significantly underperforming this 14.29%. But dividends cannot be skipped (assuming there’s no default). Thus, in addition to the "cash drag," there is an added layer of "volatility drag"—you are using a high-volatility asset to amplify leveraged fixed obligations. This risk must be compensated by raising the threshold further.

The result is brutal: the larger the required cash reserves, the lower the proportion of each additional dollar that can actually enter Bitcoin. If Bitcoin's long-term appreciation cannot consistently exceed this elevated threshold, the ultimate burden will fall on common shareholders.

Of course, cash is not completely useless. It provides genuine option value:

• When Bitcoin plummets, it can cover dividends and interest, avoiding being forced to sell coins at low prices;
• When preferred securities are trading significantly below book value, opportunistic buybacks can be made.

Strategy recently executed a beautiful play. At the end of July, it used 25 million dollars to buy back STRC with a book value of 28.89 million dollars, at a discount of 13.47%. It then used 108.6 million dollars from selling Bitcoin to buy back another 1.15 million shares of STRC. Buying back preferred stock at below par value effectively used less cash to eliminate more preferred debt and future dividend obligations. This significantly enriches the "Net Bitcoin Per Share."

Most Bitcoin companies: Don’t follow the crowd blindly; cash needs must be tied to real business

Now let's zoom the lens back to the vast majority of Bitcoin companies.

For them, cash needs should be closely tied to the business operations themselves, rather than arbitrarily setting a "reserve target." It’s important to note that even Strategy itself is unclear about how much cash it needs to hoard to achieve a better rating or attract more credit investors to buy STRC.

A company with real cash flow typically has a clear understanding of its expenditure structure: wages, taxes, debt repayments, supplier payments, recent capital expenditures, plus a reasonable buffer for operational cash flow fluctuations.

The buffer size depends on business stability.

• Companies with steady income, low fixed costs, and predictable expenses can maintain only a small buffer;
• Businesses with strong cyclicality and high capital expenditures must keep more.

The only legitimate reason for increasing reserves is that the business itself needs liquidity, not just because management wants to see a large sum of cash on hand.

Once operational needs and prudent buffers are covered, any excess cash must have a clear economic purpose. Otherwise, it only generates enormous opportunity costs, directly diluting shareholder returns. Any surplus capital in any company should compete directly with the company's own threshold return rate:

• Buy back significantly undervalued stock;
• Repay high-cost debt;
• Or invest in projects that can generate higher returns.

For Bitcoin companies, the default high-return project often means continuing to hoard Bitcoin.

Conclusion: Strategy is an extreme exception; the vast majority of companies have no reason to hoard dollars on a large scale

Putting all the logic together, the answer is actually very clear.

Strategy is an extremely rare case. The existence of its cash reserves is entirely because it has forcibly built a large digital credit issuance machine atop a Bitcoin balance sheet, while credit rating agencies exhibit significant institutional inertia, treating legitimate, highly liquid Bitcoin assets as if they were zero.

For companies without this special liability structure—meaning almost all other Bitcoin-related enterprises in the market—aside from maintaining daily operations and reasonable liquidity buffers, there is almost no reason to hoard dollars on a large scale.

Each additional dollar in cash hoarded means one less dollar in Bitcoin purchased. Under the assumption of Bitcoin's long-term upward trajectory, this is trading a certain negative real return for uncertain "security". For most companies, this is not a worthwhile trade-off.

Ultimately, the real decision between cash and Bitcoin is not driven by emotions or the actions of others, but by your own business model, capital structure, and real cash flow needs.