On March 14, Strategy founder Michael Saylor published an article outlining a simple theory of digital credit:
Gain substantial appreciation capital (BTC).
Credit secured by the capital as collateral, based on equity (STRC).
Monetize a portion of the appreciation—either directly or through derivatives (MSTRs)—to fund dividends.
Credit investors and equity investors exchange volatility, risk, duration, and performance. Credit (STRC) gains cash flow and stability. Equities (MSTR) experience amplified value performance and volatility.
BlockBeats Note: Strategy holds 738,731 BTC as the largest crypto treasury, with a total cost of approximately $56.04 billion. MSTR is Strategy's US-listed equity, currently valued at $46.6 billion. STRC is Strategy's floating-rate perpetual preferred stock, positioned as a short-term, high-yield credit product, priced around $100. Its current annual dividend yield is approximately 11%, paid monthly in cash, with the dividend yield adjusted monthly.
Strategy raises funds to buy BTC by continuously issuing new STRC, leveraging the common perception that the total value of BTC holdings should be lower than the market capitalization of MSTR to inflate its listed market capitalization. It then continues to issue STRC, hoping to achieve a spiral of upward mobility by simultaneously issuing new STRC. This leverage amplifies the greater volatility of MSTR's stock price relative to BTC, and can be considered a leveraged approach to investing in Bitcoin.
