Saylor's $100 billion Bitcoin "Credit Empire" dream: Can perpetual preferred shares support this gamble?

Michael Saylor is once again pushing his beliefs to the limit. The chairman of Strategy Inc. (formerly MicroStrategy) is attempting to build a "credit model" centered around Bitcoin using a non-traditional financing tool – perpetual preferred stock – aiming to raise as much as $100 billion, or even $200 billion.

From Software Company to the World's Largest Bitcoin Holder

For many years, Saylor has passionately encouraged his followers to convert their assets into Bitcoin, even going so far as to mortgage their homes and sell off assets. He transformed a previously low-key commercial software company into the world's largest holder of Bitcoin, galloping through the market with the motto "never sell coins."

Now, his financing strategy is shifting from traditional common stock issuance and convertible bonds to a specially structured perpetual preferred stock, attempting to continuously fund Bitcoin purchases without excessively diluting shareholder equity.

Permanent Preferred Stock: High-Yield Instruments That Do Not Expire

The latest issued "Stretch" preferred shares adopt a floating interest rate for dividend payments, have no voting rights, and are neither debt nor common stock.

Advantages: No expiration, dividends can be deferred, high flexibility for issuers.

Disadvantages: High dividend cost (8%–10%) and lack of protective clauses found in fixed income bonds.

Since the beginning of this year, Strategy has raised approximately $6 billion through four issuances of perpetual preferred stock, with the latest being a $2.5 billion "Stretch" deal, making it one of the largest in the crypto financing market for 2025, even surpassing Circle's IPO.

Saylor's "Bitcoin Credit Model" Concept

Saylor's core idea is to use Bitcoin, this volatile asset, as a basis to issue a series of income-generating securities, creating a sustainable financing cycle.

Ideal scenario: Strong market demand, with fundraising amounts reaching 100 to 200 billion dollars.

Risk scenario: Bitcoin price decline, investor confidence wanes, financing channels may quickly dry up.

The key to this model is the mNAV premium (the multiple of market capitalization to net asset value). The strategy can issue shares at a price higher than the value of its Bitcoin holdings, raising cash to then buy BTC at a discount.

Market Doubts and Potential Risks

Although supporters believe this is a smart way to maintain long-term holdings of Bitcoin, critics point out:

High interest pressure: A permanent coupon rate of 8%–10% is a heavy burden for companies with limited revenue.

Asset Volatility: Bitcoin price may be halved within months, impacting solvency.

Investor structure is single: Currently, nearly a quarter of preferred shares are held by retail investors. If enthusiasm wanes, it will be necessary to attract institutions such as insurance companies and pension funds to take over.

Famous short-seller Jim Chanos bluntly stated that non-cumulative perpetual preferred stocks are "simply crazy" for institutional investors, and he suggested shorting Strategy stocks while going long on Bitcoin, betting on premium convergence.

Why does Seller still insist?

Strategy CEO Phong Le stated that the shift to perpetual preferred stock is to build a more resilient capital structure, avoiding falling into the same predicament as during the "crypto winter" of 2022 due to debt pressure.

"As time goes by, we may no longer hold convertible bonds, but rather rely on perpetual preferred stock that never matures."

Conclusion: Gambling or Financial Innovation?

Saylor's $100 billion Bitcoin "Credit Empire" dream is both an experiment in financial innovation and a high-risk gamble.

Success: Bitcoin has become a mainstream financial collateral, and Strategy has become the world's largest BTC financial platform.

Failure: The balance sheet has become a cautionary case, demonstrating that volatile assets struggle to support long-term revenue-based financing.

Against the backdrop of lingering bubbles and uncertainties in the cryptocurrency financial market, the success or failure of this experiment will become a focal point of interest for Wall Street and the crypto community in the coming years.