Strategy built a financial machine that converts seemingly insatiable investor demand for stocks and high-yield preferred shares into a vehicle for accumulating massive amounts of bitcoin (it now holds more than 4% of the eventual maximum supply). But with the crypto asset nearly 50% below its record high from October, one of the machine’s most important components is now trading well below its intended price, raising new questions about how smoothly the company can keep funding its bitcoin accumulation strategy. The immediate concern is Strategy’s Variable Rate Series A Perpetual Stretch Preferred Stock, better known simply as Stretch (STRC). Strategy designed the security to trade close to its $100 stated value by adjusting its dividend rate. STRC does not mature, and its dividends are not guaranteed, but it currently provides an annualized cash dividend equal to 11.5% of that $100 target price. On Tuesday afternoon, STRC was trading at $87.85. Because the current annualized dividend amounts to $11.50 per share, someone buying at that market price would receive an effective annual yield of roughly 13.1%, assuming Strategy keeps paying the dividend at its present rate. Put another way, this basically means that it has become more expensive for Strategy to accumulate bitcoin. Although the company hasn’t done this and has stated it won’t issue new STRC at prices below $99, issuing new STRC around $88 while owing $11.50 annually would saddle Strategy with an effective financing cost above 13%, substantially more than its advertised 11.5% rate at $100.