Michael Saylor Defends Strategy's Sale of 1,638 BTC Worth $105M to Fund Dividends Amid Coldcard Hack

Michael Saylor's Strategy sold 1,638 Bitcoins worth nearly $105 million between 27th July and 2nd August at an average selling price of $63,957 per token. Around $52.4 million of the proceeds were used to cover dividend payments on preferred stock, and another $52.3 million to repurchase the variable-rate preferred share STRC, which carries a 12% annual payout.

Strategy also raised over $290 million via the sale of 3.01 million Strategy shares, where $250 million was dedicated for the dollar reserve that now totals $4 billion. The news mounted pressure on BTC prices, which have been struggling to rebound after a historic decline from prices as high as $126,000 per token months earlier.

Saylor had vouched to never sell Bitcoin, but did so for the first time in years this June, when it started treating the treasury as a funding source instead of a vault that only accumulated tokens. By the end of June, Strategy sold 1,363 BTCs worth $80.8 million, which was followed by a bigger sale of another 3,588 tokens for $216 million.

Saylor posted on X, clarifying that when he says 'never sell your bitcoin,' he speaks as one saver to another, and not about his company Strategy, which is 'a public company', and not his personal wallet.

'Since 2020, it has disclosed it may buy or sell $BTC to manage capital. Our shared conviction in Bitcoin remains unchanged,' he wrote on X.

While the Bitcoin sale by Strategy could be viewed as a capital management strategy, investors continue to be spooked by these developments, which come amid reports of an unbelievable hack of cold wallets, which are deemed as the most secure way to store crypto private keys offline.

The Coldcard Hack and Quantum Risks

Bitcoin investors were shocked after the mindboggling Coldcard wallets hack. These wallets were created by Canada-based Coinkite, designed to function as a BTC-only hardware cold wallet to help store private keys offline.

Security experts mapped the attack and linked it to a firmware flaw in Coldcard, which was exploited to drain 1,196 BTC addresses within an hour on 30th July, stealing over 1,082 BTCs, worth more than $70 million. Some experts and research firms continue to believe that the attack is ongoing, urging investors to move their funds away from affected Coldcard devices.

A March 2021 firmware integration error reportedly routed seed generation to a deterministic software pseudorandom number generator instead of the STM32 hardware random number generator. An attacker who is able to adequately constrain the device UID, timer state, and prior RNG-call history can replicate candidate output streams offline without device access, verifiable by deriving their addresses and comparing them with public blockchain data.

Although Coinkite swiftly rolled out a firmware for affected devices on 31st July, installing it does not repair an existing seed automatically.

Soon after the security incident came to light, even financial expert Jim Cramer disclosed he would sell his entire Bitcoin portfolio due to the risks of quantum computing breaching BTC's security firewalls in about three years.

According to Odaily, IBM Chairman and CEO Arvind Krishna said in a 30th July interview that quantum computing could challenge modern cryptography within the next three to four years. At the same time, researchers estimate that 30% of Bitcoin's supply is held in addresses with exposed public keys.

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