Michael Saylor, chairman of the largest public Bitcoin treasury company, Strategy (formerly MicroStrategy), is embarking on what could be his most daring financial venture yet: the introduction of perpetual preferred stock as a new funding mechanism.\u00a0<\/p>\n
This new approach seeks to move away from traditional methods like common stock sales and convertible bonds<\/a>, which have already helped Strategy amass $75 billion in Bitcoin assets.\u00a0<\/p>\n The perpetual preferred stock, branded \u201cStretch,\u201d offers a unique financial structure\u2014these securities do not mature and can even defer dividend payments, providing flexibility for the issuer while potentially unsettling investors.<\/p>\n The Stretch offering features variable-rate dividends and lacks voting rights, positioning it as neither conventional debt nor typical equity. Saylor believes this could provide the company with the necessary capital to continue acquiring Bitcoin.\u00a0<\/p>\n According <\/a>to Bloomberg, over the next four years, he plans to retire billions in convertible notes, reduce common stock sales, and rely more heavily on preferred offerings as his primary funding source.<\/p>\n This ambitious plan aims to establish a \u201cBTC Credit Model,\u201d where Bitcoin underpins a new stream of income. Saylor envisions the potential to raise \u201c$100 billion\u2026 even $200 billion\u201d if demand for these securities is strong.\u00a0<\/p>\n So far this year, Strategy has raised approximately $6 billion through four perpetual preferred offerings, with the latest $2.5 billion tranche being one of the largest capital raises<\/a> in the crypto space this year.<\/p>\n As Michael Youngworth from Bank of America noted, this retail-driven approach is unique in the corporate preferred market, which is typically dominated by investment-grade institutions.<\/p>\n However, there are concerns about the sustainability of this model. The perpetual preferreds require ongoing, substantial dividend payments, which could be a challenge given that Bitcoin itself does not generate income.\u00a0<\/p>\nSaylor\u2019s Bitcoin Credit Model<\/h2>\n
High-Yield Risks<\/h2>\n