Strategy (formerly MicroStrategy)
One company turned itself into a machine that converts your money into Bitcoin. Here's exactly how it works, what could kill it, and whether the people calling it a ponzi are right.
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Five different products. Five different investor types. One output: Bitcoin.
The single most important thing about every preferred stock Strategy has issued.
$6.4B raised through preferred stocks.
$0 of it ever needs to be returned.
The only hard debt with a maturity date: $6.3B in convertible notes (due 2028 to 2032).
One exception worth knowing: STRD is non-cumulative. If Strategy misses a dividend, it's gone. They don't owe it later. Every other preferred stock accumulates what's owed. STRD doesn't. That's Saylor's pressure valve in a crisis.
STRC above $100 = machine on. Below $100 = machine off. Saylor hikes the rate until buyers come back.
Five hikes in eight months. Every one because STRC dipped below $100.
MSTR moves with Bitcoin. The preferred stocks are fixed income. Different games, different scales.
In October 2024 Saylor announced the "21/21 Plan": raise $42B to buy Bitcoin. Seven months later he doubled it. $84 billion. By end of 2027.
The structure
$42B
Equity
MSTR common stock ATM sales
$42B
Fixed Income
Preferred stocks + convertible notes
$84B
Total
All of it buys Bitcoin
Equity: MSTR Common Stock
~$25B of $42B (~60%)
Original $21B ATM fully used. New $21B ATM filed May 2025. Sold via at-the-market offerings into daily trading volume.
Fixed Income: Preferred Stocks + Notes
~$15B of $42B (~36%)
Convertible Notes
$8.2B
0-2.25%, due 2028-2032
STRC
$3.4B
11.5% variable, perpetual
STRD
$952M
10% non-cumulative
STRF
$850M
10% fixed, quarterly
STRE
$670M
10% in EUR
STRK
$563M
8% converts to MSTR
Total Progress
~$40B of $84B (48%)
Started Oct 2024. Doubled May 2025. Deadline: end of 2027. Roughly halfway through with almost two years to go.
STRC volume doesn't just buy Bitcoin through STRC. It triggers a second, larger wave of MSTR selling. Both buy BTC.
$300M of STRC volume = $360M of Bitcoin bought
That's ~5,100 BTC in a single day. Daily mined supply is 450 BTC. Strategy is buying 11x what gets mined.
Why does MSTR selling follow STRC selling?
STRC = the loan (fixed payments). MSTR = the equity (no fixed payments). More loans = more equity needed to stay safe. Both buy BTC.
Mar 2-8: $377M STRC + $899M MSTR (~2.4x). Ratio shifts with market conditions.
Every dollar of preferred stock issued adds to the annual cost. Here's how the math changes as they scale.
| New Preferred Issued | Annual Cost | Breakeven BTC Return | At 5% BTC Return | |
|---|---|---|---|---|
| Today ($0 new) | $1B+/yr | 1.8% | +$1.64B surplus | |
| +$2B | $1.18B/yr | 2.3% | +$1.41B surplus | |
| +$5B | $1.52B/yr | 2.9% | +$1.06B surplus | |
| +$10B | $2.10B/yr | 4.1% | +$490M surplus | |
| +$20B | $3.25B/yr | 6.3% | -$660M deficit | |
| Full $84B plan | ~$2B+/yr | ~3.9% | +$590M surplus |
If BTC does 10%/yr
+$4.2B
annual surplus (at today's cost)
If BTC does 0%/yr
-$1B+
reserve covers 28.5 months, then BTC gets sold
Model assumes new issuance at 11.5% (current STRC rate). Full $84B plan includes a mix of rates across instruments. BTC stack: 761,068 BTC at $70K = $57.6B. All figures approximate.
Yes. Share count up ~79% in 2025. But dilution can be good, neutral, or bad. It depends on one number: mNAV.
What is mNAV?
The single number that tells you whether MSTR is cheap or expensive relative to its Bitcoin.
THE FORMULA
mNAV = MSTR Market Cap / Value of Bitcoin Held
1.5x
Stock trades at a 50% premium to the BTC it holds
1.0x
Stock trades at exactly the value of its BTC
0.7x
Stock is cheaper than just buying BTC directly
Right now, MSTR trades at roughly 1x mNAV (~$138/share). The BTC backing each share is worth about the same. That matters because it determines whether selling new shares helps or hurts existing holders.
MSTR trades at $200 but is backed by $100 of BTC per share
Saylor sells new shares at $200, buys $200 of BTC
More shares exist, but BTC per share went up
MSTR trades at $138, backed by ~$138 of BTC per share
MSTR ATM is neutral. No gain, no loss for holders.
But preferred stocks raise capital without touching MSTR at all
MSTR trades below the value of its BTC holdings
Selling new shares buys less BTC than the dilution costs
BTC per share goes down. Existing holders lose.
Sometimes they gain. Sometimes they lose. But the trend is clear.
BTC Yield = % change in BTC per diluted share. Is each MSTR share backed by more Bitcoin? Every year positive, but 2022 and 2023 barely above zero.
Sources: Strategy Q4 2024 & Q4 2025 earnings, CNBC, FinanceFeeds
Before preferred stocks
1.0x
MSTR ATM was the only tool. Below par = game over.
With preferred stocks
~0.7x
Preferred stocks buy BTC without MSTR dilution. The preferred leg offsets dilutive MSTR issuance.
Kill line depends on MSTR:preferred ratio. Mar 2026 8-K showed ~2.4x. Not a fixed rule.
If Bitcoin doesn't go up, the machine doesn't work. That's not a flaw. That's the design.
Master risk. If nobody buys, the flywheel stops.
No STRC buyers = no ATM = no capital = no BTC purchases. Everything else is downstream of this single risk.
$85M+ every month. Over $10B in preferred stock outstanding.
Dividends and interest don't stop whether BTC is at $100K or $30K. After the reserve runs out, Strategy sells Bitcoin.
Due 2028-2032. All out of the money at ~$138.
Unlike preferred stocks, these actually mature. If MSTR stays below conversion prices, Strategy owes cash.
1.8% breakeven today. ~3.9% at full $84B plan.
Every new preferred issued raises the annual cost. STRC already hiked from 10.5% to 11.5% in eight months.
STRC is liquid. Everyone can sell. But not everyone can exit at once.
~$3B of STRC trades at ~$100/share. If every holder wants their $100 back simultaneously, there is not enough liquidity for everyone to redeem. Same mechanics as a bank run. Works perfectly as long as inflows continue and exits stay orderly. If confidence breaks and everyone rushes the door at the same time, the price craters below par and the $100 "floor" disappears.
The only number that matters
BTC needs to return 1.8% per year to cover every obligation.
761,068 BTC ($57.6B cost basis) backing $1B+/yr in obligations. The stack is ~57x the annual bill.
So: it could break. But the man running it has been here before.
He's changed his mind before. Whether that's adaptive or dishonest depends on your perspective.
Restated 3 years of revenue. Stock dropped 62% in one day. tap for more
On TV: never selling. In SEC filings: may sell at a loss. Then sold 704 BTC. tap for more
Promise made July. Broken August. Rewrote the policy. Still issuing at ~1x. tap for more
The bull case: he adapts to survive. The bear case: he says whatever gets the next round done.
Sources: SEC LR-16829, Bloomberg Jan 2022, SEC 8-K Jan 6 + Apr 7 2025, Protos Aug 2025
"Ponzi" is a legal term. It means fraud. Let's be precise about what that word actually means.
What "Ponzi scheme" actually means
A Ponzi scheme is a crime. It requires deception: the operator lies about returns, hides the mechanics, and victims don't know what they're buying.
Strategy does look like a ponzi if you only read the flow of money.
New money pays old investors
New STRC/MSTR buyers fund BTC purchases that support existing holders' NAV
Only works if BTC goes up
BTC flat = 1.8% annual drag. BTC down = obligations eat the stack.
Must keep issuing
$84B plan. If they stop issuing, the machine stops buying.
Leverage on a volatile asset
$1B+/yr in fixed obligations on an asset that dropped 77% in 2022
The difference between a crime and a financial strategy is one thing: transparency.
Nothing is hidden
Every issuance, every BTC purchase, every prospectus is filed with the SEC. Public record.
Everyone knows the mechanics
Saylor explains the model on earnings calls, podcasts, and Twitter. Investors buy knowing exactly what this is.
No fake returns
Madoff printed fake account statements. Strategy's BTC holdings are verified on-chain and in SEC filings.
You can leave any time
MSTR, STRK, STRF, STRD, STRE, STRC all trade on public exchanges. Madoff locked redemptions.
Strategy is a ponzi in every way except the one that matters.
Same mechanics: new money supports old money, needs BTC to go up, can't stop issuing. But a ponzi is a crime. It requires deception. Everyone buying knows exactly what this is.
The whole thing comes down to one question:
Does Bitcoin return more than 1.8% a year?
If yes, the machine prints forever. If no, the machine eats itself.
Whether that's a good bet depends entirely on what you think Bitcoin does next.