Investors buy common stock in Michael Saylor’s Bitcoin (BTC) vault company Strategy (formerly MicroStrategy) because they believe management will generate “BTC yield.” Unfortunately, this indicator has turned negative for the first time in years.
The BTC yield, which has been positive every year since 2020 and every quarter since April 2023, is an increase in Strategy’s BTC holdings per MSTR share. This quarter, Strategy’s BTC yield is -1%.
In other words, Strategy will own less BTC per share of MSTR on September 30, 2025.
read more: BTC Outperformance Drops Strategy’s mNAV to 19-Month Low
This downturn was due to the company’s controversial decision to dilute MSTR and place $1.44 billion in the “USD Reserve” rather than buying BTC. This so-called US dollar reserve is just cash and will pay future dividend obligations on preferred stock.
This quarter’s negative BTC yield also reflects declining investor confidence in MSTR, which has steadily lost its premium over its BTC holdings over the years.
Strategy BTC Yield and mNAV Decline
BTC yield is a central metric for evaluating Saylor’s goal of increasing dilution. Specifically, by selling MSTR as well as other securities such as bonds and preferred stock when Strategy trades at a multiple of net asset value (mNAV) greater than 1x, the company can purchase additional BTC holdings per MSTR share. This will increase your BTC on a diluted adjusted basis. This is also called incremental dilution.
of course, Selling MSTR’s mNAV premium in the first place would punish previous shareholders. In fact, gradual dilution will only benefit previous shareholders if future shareholders are willing to pay an even higher mNAV, or if the price of Bitcoin subsequently rises to recoup the dilution.
Of course, management typically rules out this simple explanation when boasting about positive annual BTC yield numbers since 2020.
For years, they have avoided publishing charts of MSTR’s underlying mNAV premium (arguably the most important indicator of investor confidence in the company). It’s probably Strategies’ mNAV has been declining since May 2023.
If new investors pay a lower premium for MSTR than they would if they simply bought BTC directly, this indicates less trust in management.
Currently, investors are willing to pay just a 16% premium over their BTC holdings for the enterprise value of a strategy that includes preferred stocks and bonds. The current 16% compares to an mNAV premium of over 240% as of November 2024.
The company’s underlying mNAV, excluding preferred stock and bonds, is actually less than 1x. In other words, MSTR’s market cap is currently less than Strategy’s BTC value.
