Arca CIO Says Strategy Capital Structure Is Becoming Unmanageable, Pressuring BTC and Preferred Shareholders

Arca’s chief investment officer raised concerns over Strategy’s capital structure, saying the company and its investors are both under pressure as Bitcoin prices fall and preferred-stock dividend obligations mount.

Wu Blockchain reported on May 29 that Arca CIO Jeff Dorman wrote on X that “the MSTR situation has gotten too big to control.”

Dorman estimated Strategy’s outstanding preferred stock at about $15 billion, with annual dividend obligations of roughly $1.5 billion. He wrote that the company had raised $2 billion in cash through stock issuance to ease near-term default concerns, securing enough funds to cover about two years of dividend payments.

He questioned Strategy’s subsequent decision to use that cash buffer not for dividends, but to repurchase debt maturing in 2029. Dorman wrote that it was hard to understand why a company with cash-flow problems would use its only cash to retire zero-coupon bonds.

He also raised the possibility that Strategy may eventually have to sell Bitcoin. If those sales take place during a sharp drop in Bitcoin, the pressure could hit both BTC and MSTR, he wrote.

“This is the first real case where MSTR, BTC, and preferred holders are all actually in trouble,” Dorman wrote. “Someone is going to lose a lot of money, and it will happen within the next four months.”

Strategy is the world’s largest corporate holder of Bitcoin and has pursued a Bitcoin-centered treasury strategy under Executive Chairman Michael Saylor.