Balance

Strategy is doubling down on Bitcoin through a new $1 billion preferred stock IPO.

Executive Chairman Michael Saylor explained on CNBC’s Squawk Box how Strategy is leveraging high-yield instruments to convert dollar capital into Bitcoin (BTC) exposure.

“We are offering fixed U.S. dollar yield and we’re swapping it into BTC yield, which is what our equity investors want,” said Saylor. “The big breakthrough is that and the preferred market the capital never comes due. There’s no refinance risk. We’re basically offering a perpetual US dollar yield forever. And so by matching a very long duration instrument on the liability side with the long duration asset, we’re creating, in essence, an indestructible balance sheet.”

Outperformance of Strike and Stride highlights investor appeal

Saylor highlighted the strong performance of the company’s previous preferred stock offerings. The first, Strike, saw gains of 29% compared to a broader market decline of 6% in similar instruments. The third issuance, Stride, offered a 10% fixed yield and also outperformed, rising 22% while other preferreds fell by 4.5%.

He called this approach a “very scalable, extremely low-risk way to generate leverage” and said it benefits both sides of the market.

“It’s a win for the fixed income investors because they’re getting a yield 400 basis points more than typical preferred stocks or junk bonds. And it’s a big win for our equity investors because they want more Bitcoin.”

On his bullish long-term forecast, Saylor said he expects Bitcoin to appreciate 29% a year on average for the next 21 years. The math implies a price of $13 million per coin by 2045.”

Regulatory progress and long-term Bitcoin upside

Saylor emphasized that the broader environment for Bitcoin has never been more favorable. He pointed to increasing regulatory recognition, improvements in accounting standards that allow companies to use fair value reporting for Bitcoin, and a steady rise in the number of treasury-focused firms adding the asset to their balance sheets.

Asked about concerns around proof of reserves, Saylor responded that the company’s Bitcoin reserves are audited by KPMG, along with its liabilities. He added that the company is considering ways of accomplishing this with zero-knowledge proof, as he is “not enthusiastic” about publishing all of the company’s wallet addresses, saying it exposes custodians and employees to unnecessary risk.

Saylor also pointed to a shift in Bitcoin’s investor landscape, with early crypto advocates now joined by a growing class of institutional holders, including asset managers, exchange-traded funds, and publicly traded companies holding Bitcoin on their balance sheets.

He described the past six months as a turning point for Bitcoin, highlighting a wave of regulatory clarity and institutional support. He cited a number of key developments, including the U.S. government’s recognition of Bitcoin as a digital commodity and approval from banking regulators for financial institutions to engage with the asset.

Saylor noted that accounting standards have shifted in Bitcoin’s favor, with new rules allowing companies to report Bitcoin holdings using fair value accounting. These changes have contributed to a growing trend of publicly traded companies adding Bitcoin to their balance sheets, signaling increased confidence in the asset from traditional finance.

“These developments mean Bitcoin is no longer on the fringe,” Saylor said. “It’s moving into the financial mainstream, and that’s why I’m so bullish.”

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