Strategy, explained from the top

Everything about Strategy rests on about ten ideas. Learn these first and every later chapter becomes a combination of them.

No prior finance knowledge is assumed. Each idea gets a plain definition, a small example with made-up numbers, and the reason it matters for Strategy.

A company owns things (cash, bitcoin, software) and owes things. Everyone who gave it money holds a claim. The rule that matters most is simple: assets = claims. If the assets shrink, somebody's claim shrinks. Finance is mostly about deciding whose.

Senior claims are paid in full before junior ones get anything. This order is written into legal documents (bond indentures for debt, certificates of designation for preferred stock). A junior claim is riskier, so buyers demand a higher return for it. That's why Strategy's most junior preferred (STRD) pays more than a more senior one (STRK).

A preferred with a $100 face value (also called stated amount or liquidation preference) and a 10% rate pays $10 a year no matter what it trades at. What changes is the yield a buyer earns: the $10 divided by the price they paid.

Leverage means using borrowed or fixed-cost money to own more of something. If the asset earns more than the money costs, owners gain more than the asset did. If it earns less, owners lose more. Fixed claims don't shrink when the asset does. Chapter 7 works this through with Strategy's numbers.

The cost of capital is what a company gives up to get money. For debt it's the interest rate. For preferred it's the dividend rate. For common stock it's harder to see: there's no payment, but new shares give away a slice of all future value. A company creates value only if what it does with the money earns more than that cost. For Strategy the "investment" is bitcoin, so the test is whether bitcoin rises faster than its cost of capital.

All five Strategy preferreds are perpetual. There's no maturity date, so Strategy never has to find $14B to repay them. The price is paying the dividend forever, unless Strategy chooses to buy them back. That trade removes refinancing risk, the danger of a big repayment falling due in a bad market. That's a big economic advantage of preferreds over bonds, even though Strategy hasn't named it as a reason.

Net asset value (NAV) is what the assets would be worth to owners if you sold them all and paid every claim. For Strategy that's roughly bitcoin plus cash minus debt and preferred. The premium is how much more than that the market pays for the shares. mNAV is the ratio: 1.0x means no premium, 1.5x means the market pays $1.50 for each $1 of net assets. A premium lets a company sell shares for more than the assets behind them (Chapter 6).

A company files a shelf registration with the SEC that lets it sell securities over time. It can then do a large one-off offering (an IPO for a new preferred, for example) or an at-the-market (ATM) program, which sells small amounts into normal trading every day through a broker. Strategy uses ATMs heavily because they are cheap, quick and quiet. The limit is that each day's sales are a small share of trading volume, and buyers have to want the shares.

Strategy's whole design follows from three facts about bitcoin. Its supply is fixed. It produces no cash. And its price swings far more than almost anything else a company might hold.

The bitcoin protocol will only ever create 21 million coins. New coins are released on a schedule that halves about every four years, and roughly 95% have already been mined. No central bank can issue more. That's the core of the bull case: if demand keeps rising and supply can't, the price has to absorb the difference.

Strategy's 848,250 BTC are about 4% of all the bitcoin that will ever exist (848,250 ÷ 21,000,000).

A building earns rent. A bond pays interest. A share in a profitable company earns profits. Bitcoin earns nothing by itself. The only way to make money from holding it is for the price to rise, or to sell some.

Bitcoin has fallen by more than 70% from a peak several times, and has more than doubled in a year several times. For a company, that means the value of its main asset can halve while its dollar obligations stay the same. Volatility also has an upside: it makes options on MSTR valuable, which is why convertible buyers accepted 0% interest (Chapter 1, idea 7).

Since January 2024, anyone can buy bitcoin through US spot ETFs for a small fee. So why would an investor hold MSTR instead? Strategy's answer has three parts:

1. Leverage without margin calls. MSTR holders get more than 1x bitcoin exposure through Strategy's debt and preferreds, and nobody can force them to sell in a crash.
2. Growth in bitcoin per share. An ETF share always holds the same amount of bitcoin. A Strategy share can hold more over time if the company sells stock at a premium (Chapter 6).
3. Products ETFs can't offer. Income securities (the preferreds) and volatility (MSTR options, converts) carved out of the same bitcoin.

The counter-argument is just as simple. The ETF has no debt, no dividends to fund, no management discretion, and trades at its asset value. If Strategy's premium disappears, the main reason to prefer it weakens (Chapter 20).

Strategy holds its bitcoin through institutional custodians. Its convertible notes are unsecured, and its filings describe the preferreds as not collateralized by the bitcoin. That's a choice with history. In 2021–22 it did borrow against bitcoin, and the 2022 crash made that debt a liability (Chapter 5). Unpledged coins can't be seized in a margin call. They also give preferred holders no direct claim on the bitcoin. Their cushion is the company's overall balance sheet.

Strategy is a company that turns money raised in the capital markets into bitcoin, then sells new kinds of securities whose value rests on that bitcoin.

It used to be MicroStrategy, an enterprise software company. It still runs that software business, but the software is now a rounding error next to the balance sheet. In October 2026 Strategy held 848,250 BTC, worth about $69.7B at $82,131. That is more than any other company.

To understand it, think of three jobs it does at once:

1. Bitcoin treasury. It owns the bitcoin and wants more of it for every share of common stock.
2. Issuer of "digital credit." It sells five preferred stocks (STRF, STRC, STRE, STRK, STRD) and convertible notes. Those pay fixed or variable income, and the bitcoin is the cushion behind them.
3. Treasurer. It has to keep enough US dollars on hand to pay about $1.56B a year in dividends and interest, because bitcoin pays nothing.

The story has three phases. From 2020 to 2024 Strategy bought bitcoin with common stock and cheap convertible debt. In 2025 it launched a preferred stock almost every few months. In 2026 the focus shifted to defending those preferreds: a cash reserve, a higher STRC rate, buybacks and new rules for when it will sell stock.

Strategy didn't arrive at five preferreds and a cash reserve by design. Each step solved a problem the previous step created. This chapter walks through fourteen decisions in order: the problem, the options, the reason given, and what it cost.

Each decision separates two kinds of reason. Stated means Strategy said it in a filing or press release, linked in Appendix B. Analysis means my reading of the economics. Strategy didn't necessarily say it.

This chapter tells the story. The economics part that follows puts numbers on every decision: what it cost, what it gained and what the alternative was (Chapter 12 to Chapter 16).

Here is the puzzle. Every time Strategy sells new shares, existing holders own a smaller slice of the company. So how can selling shares be good for them?

The answer is the premium. If the market prices each share above the bitcoin behind it, Strategy can sell a share, buy more bitcoin than that share claims, and leave every other share with a little more bitcoin. The ratio of the share price to the bitcoin behind each share is called mNAV (multiple of net asset value).

Preferreds and convertibles work differently. Strategy sells a claim worth a fixed number of dollars and buys bitcoin with the money. On day one, nothing changes for common holders: there is more bitcoin, but also a dollar claim of the same size ahead of them. The gain comes later, and only if bitcoin rises faster than the cost of the money. Strategy calls this amplification. It is the same idea as a mortgage on a house.

My dat-accretion project (Chapter 28) writes each action's day-one effect on net bitcoin per share. m is the net mNAV; q is a preferred's price divided by its $100 face value.

Strategy takes one asset, bitcoin, and sells different slices of it to different investors, each at the price that investor will pay. It makes money when the slices sell for more, in total, than the bitcoin behind them costs.

Different investors want different things from bitcoin. Some want more risk, some less, some want a regular income. Strategy designs a security for each, and each buyer pays for the feature they want.

Here is the cleanest way to see whether the machine works. Total fixed charges are about $1.56B a year. The bitcoin is worth about $69.7B. So bitcoin has to rise about 2.2% a year, measured against the whole stack, just to "earn" the carry. Above that, common holders are ahead. Below it, the carry eats into their value.

For a single new security, the hurdle is its own rate. Raising $1B of STRC at 12% buys about 12,176 BTC at $82,131. The dividend costs $120M a year, about 1,461 BTC at today's price. That trade pays off for common holders only if bitcoin rises faster than about 12% a year over the life of the money. Strategy's bet is that bitcoin's long-run growth will beat its cost of credit by a wide margin. That's a forecast, not a fact, and it's the single assumption the whole model rests on.

Net assets are bitcoin ($69.7B) plus cash ($5.5B) minus claims ($20.5B), about $54.7B. A 10% move in bitcoin is $7.0B, which is a 12.7% move in net assets. So at net asset value, common holders own about 1.27x bitcoin. The market premium adds more swing on top. When MSTR trades above its net assets, its price can move further than that 1.27x.

Put the costs together and Strategy's choice of what to sell follows from two prices: the mNAV of the common and the price of the preferreds relative to $100.

A capital stack lists everyone with a claim on a company, from first-paid to last-paid. If money runs short, the top gets paid in full before anyone below gets anything. Strategy's stack has seven layers: debt, five preferreds, and common stock at the bottom, which gets whatever is left.

Two things fall out of this picture:

• Bitcoin would have to fall about 70%, to roughly $24,000, before it was worth only as much as the claims ahead of common. Below that, the common stock is worth nothing on paper.
• The market values the common at $63.8B, which is more than the $49.2B of bitcoin left after the claims (69.7 − 20.5), or $54.7B counting its $5.5B of cash. That gap is the premium from Chapter 6.

Why sell five different preferreds instead of one? Because each one is built for a different buyer. Some want safety, some want the highest yield, some want a bond-like price that barely moves, some want euros, and some want a piece of the upside. Strategy's pitch is that it can sell "digital credit" to all of them, each on different terms, all backed by the same bitcoin.

A preferred stock is a list of promises. Each promise makes the security more attractive to some buyer, and each one costs Strategy something. Reading the terms this way explains why the five preferreds look so different.

The question to ask of every term is: who does this help, and what does it cost the other side?

Every one of them was first sold below its stated amount: STRK at $80, STRF and STRD at $85, STRC at $90 and STRE at €80. That raises the buyer's starting yield above the headline rate (€10 on €80 is 12.5%) without printing a higher rate on the security. It also means Strategy took in less cash than the claim it created. For STRE, €620M raised for a €775M claim. That gap is a real cost, paid up front.

One security would have to be priced for the average buyer. A ladder lets Strategy charge each buyer only what their slice is worth. Cautious money buys STRF at the top and accepts less. Yield-hungry money buys STRD at the bottom and gets more. Strategy collects the difference. The cost is complexity, and a fixed order that can't easily be changed later.

STRC is the most important product to understand, for two reasons. It's the largest preferred, about two-thirds of Strategy's annual cash charges. Management can adjust its dividend rate monthly to encourage trading near $100. It remains perpetual preferred equity with market and payment risk. Rate changes require a board decision.

Every security is a trade. Strategy gets cash now and gives up something later. The buyer gives cash now and is paid for a specific risk. This chapter prices both sides of every product.

Three numbers do most of the work:

• Cash raised per $100 of claim: how much money Strategy actually received for each $100 it now owes.
• Yearly cost on the cash raised: the dividend divided by the cash Strategy actually got. This is the real cost of the money.
• Break-even bitcoin growth: roughly how fast bitcoin must rise for the trade to help common holders. For a preferred spent on bitcoin, it's about the yearly cost on cash raised.

The early decisions were small by today's standards. Their economics set every rule Strategy follows now.

The trade. Strategy swapped $250M of cash, which was earning close to nothing in 2020, for 21,454 BTC at an average of about $11,650.

What it cost. The interest the cash would have earned, and the certainty of having it. In 2022, when bitcoin fell to about $15,500, those coins were worth about $330M, still above cost but far below their 2021 peak. Under the accounting of the time, they were also booked as large losses.

What it gained. At $82,131, those first coins are worth about $1.76B, seven times what was paid.

The buyback signal. At the same time, Strategy offered to buy back up to $250M of its own shares. Holders tendered only $60.5M. In economic terms, most owners declined to sell at up to $140 a share. That was a vote to keep their stake in the company and its new plan, and it left more cash for bitcoin.

The trade. $1.7B borrowed through two convertible issues at an average coupon of about 0.3%.

What it saved. At the 6.125% Strategy paid on its secured notes in 2021, the same $1.7B would have cost about $100M a year in interest. The converts cost about $5M.

What it really cost. The difference was paid in options. If MSTR rose above the conversion prices, holders would receive shares, diluting common holders. If it fell, holders would want their cash back. Strategy effectively sold volatility on its own stock to fund bitcoin. Because MSTR was so volatile, that volatility was worth a lot to buyers.

The economics. Secured debt was cheaper than unsecured debt would have been, because lenders had the coins as backup. But pledged coins carry a hidden cost: a price fall can force a sale at the bottom. In 2022 bitcoin went below the reported margin level. Strategy wasn't forced to sell, but it had to manage the risk. It later spent $15.3M to get its coins back from the lien.

The rule it created. Never pledge the bitcoin. That rule has a price: Strategy's unsecured preferreds cost 8–12%, more than secured debt. In return, no lender can ever force a sale.

Strategy reported a $1.47B net loss for 2022, mostly from $1.29B of bitcoin impairments. Under the old rules a company wrote bitcoin down when the price fell but couldn't write it back up when it recovered. No cash left the company. The economic lesson is to read Strategy's earnings and its cash separately (Chapter 18).

When the market pays three times net assets for your stock, you sell stock. When that window might close, you build other ways to raise money. That's this era in two sentences.

The economic catch. Every sale at a premium transfers value from new buyers to old holders. New buyers do it willingly only if they expect the premium to persist. So the strategy works as long as the market believes it will keep working.

The trade. In Nov 2024 Strategy borrowed $3B at 0% interest, convertible at about $672 a share, roughly 55% above MSTR's price at the time.

What it saved. Interest. At even 6%, $3B costs $180M a year.

How it turned out. MSTR fell to about $151 by October 2026, far below $672. The option is nearly worthless, so the notes behave like 0% debt. Holders can put them in June 2028. Strategy repurchased $1.5B of them in May 2026, leaving $1.5B. In effect, the 2024 decision traded a $180M-a-year interest bill for a large principal question in 2028.

The economics. Index funds tracking the Nasdaq-100 must hold MSTR. That creates steady passive demand, which supports both the price and the trading volume that ATM sales depend on. The flip side showed up in Jan 2026, when MSCI froze its index share counts for bitcoin-heavy companies. Index decisions directly affect how much stock Strategy can sell.

The risk. The 15% corporate alternative minimum tax is based on book profit. Under fair-value accounting, every $10,000 rise in bitcoin is about $8.5B of paper profit for Strategy. Taxed at 15%, that could have meant roughly $1.3B of cash tax on gains it never sold. That's an illustration, not a calculated liability.

The outcome. After IRS interim guidance (Notice 2025-49), Strategy said in Oct 2025 it no longer expects to owe the tax on unrealized gains. That removed a potential cash drain the size of a year's dividends.

The economics. As Chapter 12 shows, the five launches created about $0.9B more claim than cash raised. Why accept that? Because a brand-new security from a B- rated bitcoin company needed a higher starting yield to win buyers. Selling at a discount raises the buyer's yield without printing a higher rate, which keeps the stated rate (and the long-run cost on any later sales at $100) lower.

The economics. A fixed-rate preferred's price drifts with interest rates and credit worries. Once it trades below $100, every new sale creates more claim than cash, so issuance stalls. A variable rate lets management push the price back to $100 and keep selling every day. STRC has $17.5B of unsold ATM capacity for that reason.

The cost. The rate rose from 9% to 12% in a year: about $264M a year more at today's size. That is the price of a security that can always be sold.

The economics. A new investor pool means more demand and potentially a lower rate than selling a sixth US preferred into the same market. The cost is currency risk. So far it has worked in Strategy's favour: the euro weakened after launch, shrinking STRE's dollar claim by about $22M.

Once the premium shrank, the question changed from "how fast can we grow?" to "how do we keep the preferreds trusted?" Every tool for that costs something. Here's what.

The trade. Keep $4.88B in dollars instead of bitcoin.

What it costs. That's about 59,400 BTC Strategy could have owned. If bitcoin rises 30%, the Reserve has forgone about $1.46B of gains. Treasury-bill interest offsets part of that cost.

What it buys. Insurance. With 37 months of charges in cash, Strategy doesn't have to sell stock below net assets or sell bitcoin in a downturn. Insurance is worth most exactly when bitcoin falls, which is when the forgone-gains cost is negative.

What it costs. Dilution: common holders sold part of the company to retire a claim. And bitcoin buying slowed, because the money went to buybacks instead.

Why it still added value. MSTR was the expensive security (above 1.0x) and STRC the cheap one (below $100). Selling the expensive security to retire the cheap one adds value until STRC trades above $100 × mNAV, about $119 in October.

The yield math. A 12% rate paid twice a month and reinvested earns about 12.72% a year. Paid daily, about 12.75%. The difference is only 0.03 points, so daily payment isn't really about yield.

The real economics. On each record date, a twice-monthly STRC drops by about $0.50 as the dividend comes off. Daily, the drop is about 3 cents. A smoother price makes STRC more like a cash account. It also removes the incentive to buy just before a record date and sell just after. Strategy's proxy lists price stability and easier access to preferred capital among its reasons. The cash cost to Strategy is unchanged, apart from running the payments.

The economics. The definition matters because it decides when selling stock is "accretive". The net version subtracts every senior claim first, which matches the real question: does a new share bring in more net bitcoin than it takes? Measured that way, selling stock adds value above 1.0x and destroys it below. The change was criticized for its timing, but the net definition is the economically correct test for a company with large preferred claims.

The economics. Below 1.0x mNAV, raising $100M by selling stock gives away about $125M of net assets at 0.8x. Selling $100M of bitcoin gives away $100M, plus any tax on gains and the price impact of selling. So below the line, selling bitcoin is the cheaper source of cash, which is exactly when the program allows it. The cost is the thing Strategy exists to avoid: owning fewer coins.

Suppose Strategy needs to pay $100M of dividends. It has six ways to do it. Each one costs common holders a different amount, and the cheapest one depends on mNAV.

What the table says

• Above 1.0x, stock is the cheapest source. That's why Strategy funds dividends with ATM sales whenever the premium allows, and why paying STRK in shares beats paying it in cash at 1.19x.
• Below 1.0x, cash and bitcoin are cheaper than stock. That's the logic behind both the Reserve and the BTC Monetization Program.
• Preferred issuance and skipping only defer the bill. They look free today and cost the most later.
• The Reserve is neutral today but buys time. Its real value is that it lets Strategy wait for a better mNAV instead of selling stock or bitcoin at a bad moment.

Bitcoin pays nothing, so every dividend dollar has to come from somewhere else. Strategy has built four pipes for this, plus two programs that send money back out.

What an ATM is

An at-the-market program lets a company sell shares into the market a little at a time through brokers, instead of one big offering. Strategy reports every week how much it sold and how much registered capacity is left. Capacity is a ceiling, not demand: it only turns into cash if buyers show up at a price worth selling at.

The order of defence

1. Sell MSTR while it trades above its net bitcoin. That pays dividends without touching the Reserve.
2. Spend the Reserve. About 37 months of charges today, 25 months above the policy floor.
3. Pay STRK in shares to save about $112M a year, or skip STRD, which is legal but would damage trust.
4. Sell bitcoin. Management has called this a last resort. The program allows up to $1.25B into the Reserve, and more with board approval.

A dividend rate is different from a market yield

The rate applies to the stated amount. Current yield divides the annual dividend by the traded price. For a fixed 10% rate on $100 stated amount, the annual dividend is $10. At an illustrative $80 price, current yield is 12.5%; at $110, it is 9.09%. These are illustrations, not quotes.

A higher current yield can reflect credit concerns, liquidity, interest rates or structural differences. It does not measure expected total return. A perpetual preferred has no scheduled maturity at which the investor is assured $100. STRK’s conversion feature, STRC’s variable rate, STRE’s euro payments and the seniority ladder all affect comparisons.

Use the same quote time and currency for all five products. The workbook preserves source dates; it does not claim a refreshed executable quote. Dividend yield is not a yield to maturity or a guarantee of payment.

Return of capital still consumes cash

Strategy reported that its 2025 preferred distributions were return of capital for U.S. federal tax purposes to the extent of each holder’s basis. That reduces basis; distributions above basis are capital gains. The company’s expectation for future treatment depends on tax earnings and profits and can change. Tax classification does not reduce the issuer’s cash dividend obligation.

February results and tax explanation; Forms 8937 and issuer tax records. These describe issuer reporting, not a personalized tax conclusion.

Fair-value profit does not pay a dividend

Strategy adopted ASU 2023-08 in 2025. Changes in bitcoin fair value enter reported net income. An unrealized gain raises accounting earnings without producing cash. A fair-value loss can be recorded while the company still holds a cash reserve. The coverage model therefore separates cash charges, available liquidity and bitcoin value.

Q2 filing, digital-assets accounting policy. A bitcoin sale can create cash, with taxes and execution costs that the snapshot calculator does not estimate.

The software business remains an operating business

Q2 2026 revenue was $122.4M and gross profit was $81.6M. For scale only, four times that quarter’s revenue is $489.6M, about 31% of the model’s $1,559.7M annual cash charges. Revenue is before operating expenses, taxes, reinvestment and working capital, so this comparison is not operating cash coverage. The model assumes no software cash contribution until a source-backed cash forecast is added.

Q2 2026 results.

Strategy doesn't judge itself on earnings. It reports its own set of bitcoin measures, and it has changed some of them as the balance sheet changed. Know the definitions cold. The biggest trap is that "mNAV" has three different meanings.

MSTR is worth its net bitcoin plus whatever the market will pay for Strategy's ability to grow it. The first part is arithmetic. The second part is the whole debate.

Paying $151 for $130 of net assets needs a reason. These are the arguments, with the honest objection to each.

The premium is reflexive: it affects the very thing it's valuing. A high premium lets Strategy add bitcoin per share. That growth supports the premium, and the loop can run either way (Chapter 6). This is why mNAV swings so much. Basic mNAV was around 3.4x in November 2024 (a secondary estimate). The enterprise-value version fell below 1.0x in late June 2026, and the net version sat at about 1.19x in October.

A credit analyst asks two questions about any security that promises payments. Will the payments keep coming? And if they stop, how much of my money comes back?

The first is coverage: how long the cash lasts (Chapter 27 answers it in detail). The second is cushion: how much asset value sits below your claim. For Strategy's preferreds, the cushion is bitcoin.

A lender making a bitcoin-backed loan usually lends well under the coins' value and demands more collateral if the price falls. Strategy's most junior preferred sits at about 29% "LTV", which looks conservative by that standard. But the comparison flatters it in three ways:

• No margin call means no early warning. A lender can sell collateral early. Preferred holders just watch.
• One asset. The cushion is a single, volatile asset. Bitcoin has fallen more than 70% from its peak before.
• Perpetual exposure. A one-year loan only has to survive one year. A perpetual preferred has to survive every year.

That's why S&P rated Strategy B- in October 2025, deep in high-yield territory. It cited bitcoin concentration, a narrow business, weak risk-adjusted capital and thin dollar liquidity. S&P rates the issuer. The preferreds, ranking below its debt, would be judged riskier still.

The preferreds' trading prices are the market's running credit opinion. A preferred far below $100 is the market demanding a higher yield. STRC climbing back to about $99.65 by October 2026, from the high $80s in mid-2026, is the market saying the credit risk eased, helped by the 12% rate, buybacks and the larger Reserve (Chapter 11).

Most risks start in the same place: the bitcoin price. A big fall hits Strategy through several channels at once, and they reinforce each other.

Numbers stick better as stories. Here are three five-year paths for Strategy, each told the way a treasurer would live through it. The figures come from the coverage model's 20-quarter path (Chapter 27).

These are model runs on stated assumptions, not forecasts. Every path pays the full $6.7B of convertible puts in cash when they fall due, which is the harshest assumption.

Years 1–2. MSTR trades above its net assets, so Strategy keeps selling a little stock every day. The proceeds pay most of the ~$390M quarterly dividends and interest, so the Reserve barely moves. STRC trades near $100, and the rate holds at 12%.

Years 2–3. The convertible puts arrive: about $1.0B in Sep 2027, then $2.0B, $1.5B and $1.4B through 2028. Each one is a large one-time cash need, paid from stock sales and the Reserve.

Year 5. About $11.1B of common has been sold in total, every put has been paid, and $1.5B of cash is left. The cost is dilution: common holders now share the company with many more shares, though each share still holds a similar amount of bitcoin as long as the stock sold above net assets.

Prices are unchanged, but suppose nobody will buy MSTR, or the stock trades below its net assets so selling it would cut bitcoin per share. The Reserve pays the dividends for about three years. The puts arrive in the middle of that. By the end of the path, the model is $9.5B short. To close that gap, Strategy has four real options: sell bitcoin (allowed into the Reserve up to $1.25B, more with board approval), pay STRK in shares, sell preferreds if they trade at $100, or negotiate with convertible holders.

Quarter 1. Bitcoin falls 70% to about $24,600. Bitcoin's cover over the debt and preferreds drops to about 1.0x. MSTR trades below its net assets, so stock sales stop.

Quarters 1–4. STRC's price falls and its rate is pushed to 15%. Charges rise to about $1.83B a year. The Reserve now lasts about 32 months instead of 37.

Years 2–3. The Reserve runs down while puts fall due. In this scenario MSTR is far below the conversion prices, so holders will want cash. The gap reaches $10.8B over the path.

The choice at the end. Selling bitcoin at the bottom, the thing Strategy exists not to do, or leaning on the preferred terms: skipping STRD (non-cumulative), paying STRK in shares, and only then the senior layers, where STRF's and STRE's step-ups make skipping very expensive.

Many of the most important numbers in this book are choices, not market outcomes: STRC's rate, whether to sell stock this week, whether to skip a dividend, whether to sell bitcoin. So it matters who makes them.

The people

Michael Saylor co-founded MicroStrategy in 1989, led the move into bitcoin in 2020 and has been Executive Chairman since August 2022. He is also its public voice. Phong Le has been CEO since 2022, after serving as CFO when the strategy began.

Control

Saylor holds Class B shares that carry extra votes per share, giving him roughly a third of the total voting power (Oct 2026 proxy, as reported). That's not a majority, but it means a shareholder vote such as the Oct 28 daily-dividend amendment needs only modest support from other holders to pass.

Why this matters for the analysis

• Discretion is a risk and a tool. A board that can adjust STRC's rate, pay STRK in shares or pause stock sales can respond to stress. Investors can't predict exactly how it will.
• Key-person risk. The strategy, the brand and much of the investor following are tied to one person.
• Aligned incentives. Saylor is a large holder of the common stock, which absorbs losses first. That aligns him with common holders, which isn't the same as aligning him with preferred holders.

Outside referees

Three outside parties shape Strategy's room to move. The SEC requires filings, including the weekly 8-Ks this book relies on. Rating agencies such as S&P (B-, Oct 2025) affect who may buy the securities. Index providers such as MSCI decide whether passive funds must hold MSTR, and froze its index share count growth in Jan 2026.

Apply the same questions to each firm: what assets does it hold, what cash can those assets generate, what claims rank ahead of common, and what funding is available when issuance slows? Using Strategy’s net-coin definition across firms creates a comparison, not an endorsement of that definition.

How to make the comparison fair

Match observation dates, currencies and dilution definitions. Deduct senior claims once. Do not apply a staking yield to the whole treasury if only some ETH is staked; do not treat option premiums as risk-free recurring earnings. Compare net cash after costs with cash charges, and show principal deadlines separately.

The dat-accretion project asks a different question: whether a capital rotation changes net coins per share at disclosed prices. A rotation can add net coins per share while cash coverage weakens. Both measures are needed to describe the tradeoff.

I built three projects to understand this world from three angles. Each answers one question a Bitcoin Finance team actually deals with, using public filings only.

Where they show up in public

The Sats per Share X series uses all three. Draft topics: Oct 27 (Q3 preview: STRC buybacks vs bitcoin buys), Nov 10 (Q3 results per share, using the refreshed coverage model) and Nov 24 (mNAV vs the point where selling bitcoin beats selling stock, plus the MARA case). They are drafts until you approve them.

The question is how long cash and common issuance can fund preferred dividends and debt interest, and how convertible puts change that answer. The workbook includes STRF, STRC, STRE, STRK and STRD.

Download the Excel workbook. The full model calculates inside Excel. The web calculator below reproduces its snapshot coverage formulas.

What changed in the model

The original 15.2-year figure divides a finite Reserve and ATM authorization by flat annual charges. It assumes enough demand to use that authorization and excludes principal. It is a conditional capacity calculation, not a funding forecast.

The new Quarterly path spans 20 quarters, beginning with an Oct 16 stub. It rolls cash, remaining ATM and shares; stresses BTC and the premium together; charges issuance fees; and includes each put date. It shows unmet financing needs explicitly. After a shortfall, the schedule measures required funding rather than predicting continued solvency.

Net mNAV uses price divided by net bitcoin value per fully diluted share. The bridge moves in-money notes into dilution, deducts out-of-money notes, and deducts preferred claims while adding USD Assets. Snapshot grids hold observed moneyness fixed. The path uses the previous quarter’s price for classification, a disclosed approximation that avoids circular formulas.

Demand scales down with the premium and BTC drawdown. Its coefficients are editable assumptions without historical calibration. A 1x issuance gate is also an assumption. The capital framework describes discretion near 1x, not an unconditional prohibition.

STRC’s optional rate rule

The board’s declared 12% rate is the default. An optional illustration applies February’s monthly VWAP bands using minimum indicated changes. June’s policy subsequently held the rate near par, so enabling the old bands is a stress choice. It is not a forecast of the board’s next action.

Convertible puts

Each note has a conversion price, date and principal. The path defaults to full cash payment at every put, including in-money notes. Moneyness identifies economic pressure; it does not establish conversion eligibility or predict a holder’s election. Partial election assumptions do not refinance the remainder, and all maturities fall beyond this path.

The question. Strategy, BitMine and SharpLink each sell stock, buy it back and trade preferreds every week. Using Strategy's own net-coins-per-share definition for all three: what did each action do per dollar, and at what price does it change sign?

The key move is that Strategy's 2026 rotation (sell MSTR, retire STRC) and BitMine's opposite rotation (sell its BMNP preferred, buy back common) share one break-even line: m = q. Strategy's adds while m > q; BitMine's adds while m < q.

How it's built

Each weekly 8-K is parsed into actions (one row each, linked to its filing). Balances are rolled forward from 10-Q anchors, and each week's change in net coins per share is split into price, convert flips, each action, carry and a residual. A done check compares the rebuild against live sources before the page updates. There's also a 24-lesson course in the repo that teaches it from scratch.

What it taught me for this book

• The rules table in Chapter 6.
• Why net mNAV, not basic mNAV, is the number to watch.
• That Strategy's 2026 buybacks were accretive on its own definition every week.

The question. A bitcoin miner, MARA, asks for a $5.0M 12-month revolver secured by its bitcoin. How much should a lender approve, and on what conditions?

Strategy sells credit backed by bitcoin; this case is about buying it. It's the same skill from the other side of the table: how much is bitcoin worth as cover after a stress haircut, and what must be true before any money moves?

Facts from MARA's Jun 30, 2026 filing

• 35,577 BTC, but 4,742 lent out and 4,528 pledged, leaving 26,307 free.
• $421M of cash, about 30% held in a subsidiary for its own use.
• About $2.4B of debt, including $291.6M that holders can put in June 2027. A static screen leaves −$194.8M if they do.

The link back to Strategy

Two lessons carry straight over. First, count only the coins and cash that are actually free: that's why the coverage model separates the ring-fenced Reserve from USD Cash. Second, watch put dates: MARA's June 2027 put is the same kind of risk as Strategy's $5.9B of puts in 2027–28.

Answer each one out loud in under a minute before opening it. The answers use this book's numbers. Refresh them after Q3.

Every calculation in this book, in one place. $ figures in millions unless noted. Example values are the Oct 2026 snapshot.

Filings first; press coverage is marked. Accessed Oct 16, 2026.

Definitions and new chapters

• Issuer metric definitions: net mNAV, conversion classification and 2026 BTC Yield methodology
• February results: historical STRC rate bands and tax treatment, superseded where noted by June policy
• Return-of-capital records

Strategy filings (SEC EDGAR)

• 8-K weekly update, Oct 12, 2026: holdings, Reserve, USD Cash, ATM capacity, buybacks
• 10-Q, Q2 2026: preferred notional, ranking, convertible notes and put dates, share count
• 8-K, Oct 16, 2026: STRC 12% and November daily dividends
• 8-K, Jun 29, 2026: Digital Credit Capital Framework, Reserve policy, BTC Monetization Program
• 8-K, Sep 8, 2026: preferred buyback raised to $2.0B
• 8-K, Aug 24, 2026: USD Cash
• FWP, Aug 24, 2026: $1.703B annual obligations; KPI glossary
• Amended STRC certificate of designations, Jun 15, 2026
• STRE certificate of designations, Nov 2025
• 10-K Exhibit 4.2, description of securities
• Definitive proxy, Oct 28, 2026 special meeting
• 8-K, Nov 2025: STRE IPO pricing

Decision history (added Oct 19, 2026)

• Q2 2020 results, Jul 28 2020: capital allocation plan
• Aug 11 2020 release: first 21,454 BTC; Saylor's rationale
• Tender offer result, Sep 2020: $60.5M of shares bought
• Treasury Reserve Policy 8-K, Sep 2020
• Dec 2020 convertible notes · Feb 2021 convertible notes · Jun 2021 secured notes
• Silvergate loan, Mar 2022 · prepaid Mar 2023 · Fortune on the margin-call level (press)
• FY2022 10-K: impairments and 2022 low · The Block on the 2022 leadership change (press)
• Q3 2024 10-Q: secured notes redeemed; CAMT expectation · Nov 2024 0% notes due 2029
• Oct 1 2025 8-K: CAMT no longer expected · Vedder Price on Notices 2025-46/49 (law firm)
• Jan 2025 release: preferreds within the 21/21 Plan · May 2025 presentation: "pristine fixed income"
• Preferred IPO pricing 8-Ks: STRK · STRF · STRD · STRC
• Prospectuses (call and put terms): STRK · STRF · STRD · STRC
• Sep 24 2026 8-K: daily dividends meeting · CCN on the Nov 2024 premium (secondary)

Press and secondary

• Business Wire: STRE IPO pricing
• The Block: S&P assigns B- (Oct 2025)
• Investing.com / Reuters: MSCI drops exclusion plan (Jan 2026)
• Protos: mNAV redefinitions and PrimeXBT: shift to net mNAV (Jul 2026)
• Cointelegraph: STRC to 11.50%; Crypto Briefing: STRC held at 12%
• The Block: daily dividends proposal
• FXStreet: $44.1B of new ATM capacity (Mar 2026)
• Market data: Coinbase BTC-USD close, Yahoo Finance MSTR history, ECB EUR/USD reference rate (Oct 15–16, 2026)

My projects

• Preferred coverage model: Download workbook (Excel workbook with native verification pending)
• dat-accretion: rahilbhavan.github.io/dat-accretion · code
• MARA credit case: mara.rahilbhavan.com · code

Timeline events from 2020–2025 (first purchase, first convertible, split, 21/21 and 42/42 plans, launch months) come from Strategy's press releases as widely reported. Check the original release before quoting exact figures.