Strategy Inc purchases $28.7M bitcoin from stock sale proceeds
Strategy Inc, the bitcoin treasury company subsidiary of MicroStrategy, disclosed on October 5 (Monday) that it purchased $28.7 million in bitcoin during the week ended October 4, 2026, using proceeds from preferred stock sales and cash reserves. The filing also shows the company reversed a $4.12 billion deferred tax liability after its bitcoin holdings exceeded cost basis, a shift that reduces estimated tax expense by more than $4 billion.
- Strategy sold $15.7 million of preferred stock, routing net proceeds directly to bitcoin purchases.
- Company maintains $4.88 billion in USD reserves for dividends and debt service as of October 4.
- Deferred tax liability on bitcoin holdings flipped to asset, releasing valuation allowance and cutting tax expense.
- $28.7M Bitcoin purchased in the week ended October 4, 2026 combined funding sources
- $4.88B USD Reserve balance maintained for preferred stock dividends and interest payments
- $1.88B Estimated deferred tax liability as of September 30, down from $6.00 billion
Strategy Inc filed its quarterly 8-K disclosure Monday with the SEC announcing bitcoin purchases and capital activity during the week ended October 4. The filing names the registrant as Strategy Inc and includes updates on at-the-market preferred stock offerings, bitcoin acquisitions and preferred stock repurchases across multiple series of perpetual preferred shares.
Bitcoin Purchases Funded From Two Sources
Strategy purchased $28.7 million of bitcoin in the period from September 28 to October 4. Of that amount, “$15.7 million of bitcoin purchases were made using net proceeds from MSTR Stock sales and $13.0 million of bitcoin purchases were made using USD Cash,” according to the filing.
The company distinguished between two cash reserves: a USD Reserve earmarked to cover dividends on preferred stock and interest on debt, and USD Cash deployed for broader treasury purposes including bitcoin acquisition. During the same week, Strategy used $154.1 million of USD Cash for preferred stock repurchases and $142.5 million from the USD Reserve for dividends and interest payments.
Tax Position Reversal on Unrealized Gains
The most material shift disclosed is Strategy’s reversal of a $4.12 billion deferred tax asset. Strategy estimates that “as of September 30, 2026, the fair value of Strategy’s bitcoin holdings exceeded the cost basis of its bitcoin holdings,” triggering the release of a valuation allowance that had been held against previous unrealized losses.
The release “resulted in an approximately $4.12 billion income tax benefit, reducing Strategy’s estimated deferred tax expense from approximately $6.00 billion to $1.88 billion.”
The filing does not disclose the absolute cost basis of Strategy’s bitcoin holdings or their fair value as of September 30, leaving open the total unrealized gain and the implied average purchase price. It also does not specify the price at which the recent $28.7 million purchase was executed.
Capital Structure and Preferred Stock Activity
Strategy maintains four series of perpetual preferred stock: 10.00% Series A Perpetual Strife, Variable Rate Series A Stretch, 8% Series A Strike, and 10% Series A Stride. The filing shows $1.0 billion remains available under the MSTR Stock repurchase program and $547.2 million under the digital credit securities repurchase program for preferred stock buybacks.
Strategy used its at-the-market offering program to raise capital for bitcoin purchases, with preferred stock sales generating net proceeds routed directly into digital assets. The filing does not disclose the dividend rates or liquidation preferences of each preferred series, nor does it state the total preferred shares outstanding or the weighted-average coupon across all series.
The CCS read. Strategy’s reversal of a massive deferred tax liability signals confidence in its bitcoin thesis: management now believes unrealized gains are durable enough to release the valuation allowance. The capital structure, splitting cash into dollar reserves for liabilities and liquid reserves for acquisitions, is transparent and disciplined. But the filing omits absolute bitcoin holdings, fair value, and cost basis, figures needed to compute the magnitude of unrealized gains and Strategy’s average entry price.
Strategy’s next material disclosure will come with its Form 10-Q for the quarter ended September 30, 2026, due no later than November 14, 2026, which will include audited financial statements showing bitcoin holdings at fair value and the full impact of the tax reversal on net income.
