MicroStrategy’s Bitcoin Empire: MSTR, MSTY & The Preferred Stocks Explained

Figure: Michael Saylor, founder of MicroStrategy and leading advocate of Bitcoin.

Strategy, known as MicroStrategy and co-founded by Michael Saylor, has accumulated over 640,000 Bitcoin. That’s more than 3% of the total supply of bitcoin that will ever exist. This amount also surpasses the total held by the top 10 countries combined.

But what some people don’t know is that Strategy actually offers six different ways for you to invest and gain exposure to its strategy. Most have only heard of the main one, MSTR. But there’s also an ETF called MSTY, and four different preferred stocks: STRF, STRK, STRD, and the newer STRC. Each one is designed for a completely different type of investor, with its own unique risks and rewards.

The Great Pivot: From Software to Bitcoin

Before we dive into the products, it’s worth quickly recapping how Strategy became the world’s largest corporate holder of Bitcoin.

Figure: MicroStrategy, the largest publicly traded company holding Bitcoin. Source: Strategy

The company actually launched back in 1989 as a software firm called MicroStrategy. But 2020 was its defining moment. Under Michael Saylor, the company made its first massive purchase of 21,454 Bitcoin. With that single move, Strategy pivoted.

Figure: Michael Saylor, founder and executive chairman of MicroStrategy. Source: Strategy

It evolved from a business intelligence company into what it is today: the world’s first and largest “Bitcoin Treasury Company.”

Key Concepts Explained

Before we dive into Strategy’s individual stocks, there are a few key concepts we need to understand first that will give us the full picture of what Strategy’s doing.

The Capital Stack

First up is the idea of the “capital stack”. The easiest way to think about this is as a company’s financial pecking order. It dictates who gets paid first if the company ever gets into financial trouble and has to liquidate its assets. For Strategy, the stack looks like this, from safest at the top to riskiest at the bottom:

• Senior Debt: These are the company’s bondholders. They have the first claim on everything and must be paid back before anyone else.
• STRF (Strife Preferred Stock): This is the most senior and safest of all the preferred stocks.
• STRK (Strike) & STRC (Stretch) Preferred Stocks: These sit in the middle tier.
• STRD (Stride Preferred Stock): This is the most junior and riskiest of the preferred stocks.
• MSTR (Common Stock). Common shareholders have the last claim on the company’s assets, which means they face the highest risk, but also have the highest potential for reward.

Figure: MicroStrategy’s capital stack, showing the hierarchy of its financial instruments.

Common Stock vs. Preferred Stock

Next, it’s crucial to understand the difference between the two main types of stock on offer:

common stock and preferred stock.

Common Stock (e.g., MSTR):

Represents true ownership in the company.

Provides voting rights.

Offers potential for unlimited upside if the company performs well.

Highest risk: bottom of the capital stack.

No guaranteed income.

Preferred Stock:

A hybrid of stock and bond.

Provides steady income through dividends (often fixed).

Higher claim on assets than common stock.

Trade-off: usually no voting rights and limited price growth.

Designed for income-focused investors seeking stability.

To put it simply;

Common stock = for growth investors betting on long-term success.

Preferred stock = for income investors seeking predictable cash flow.

Cumulative vs. Non-Cumulative Dividends

This concept is absolutely critical for understanding the risk of income-paying stocks.

Cumulative Dividends:

Provide strong investor protection.

If Strategy misses a dividend payment, it isn’t lost.

The missed payment accrues like debt.

The company is legally obligated to pay back all missed dividends in full before common stockholders (MSTR holders) can receive anything.

Applies to: STRF, STRK, and STRC.

Non-Cumulative Dividends:

Considered a red flag for risk-averse investors.

If the board decides not to pay in a given quarter, that dividend is lost forever.

No obligation to make up missed payments.

Applies to: STRD.

MSTR: The Common Stock

MSTR is Strategy’s common stock and the most well-known option. It represents true ownership in the company, complete with voting rights. Unlike preferred stocks, MSTR doesn’t pay a dividend. Instead, investors buy it with the hope that its value will rise alongside Bitcoin.

Performance Highlights:

• Share price has surged by more than 2,600% over the last five years.
• A $1,000 investment in 2020 would now be worth over $23,000.

Correlation with Bitcoin:

• Average 0.93 correlation to BTC.
• Moves almost in lockstep with Bitcoin.
• Example: If Bitcoin rises 10%, MSTR typically climbs by a similar amount.

Why It Trades at a Premium:

• Anticipation of future Bitcoin purchases.
• Unique leveraged exposure through a regular brokerage account.

Figure: MicroStrategy’s performance since adopting its Bitcoin strategy, showing a 1,620% increase; outperforming Bitcoin, the Magnificent 7, and the S&P 500 index.

This dynamic creates a self-reinforcing loop. Strategy can issue new shares at the inflated price, raise capital, and buy more Bitcoin. That strengthens its position as the leading Bitcoin treasury company, attracting even more investors and helping sustain the premium.

Figure: MSTR vs. BTC dynamics, showing MicroStrategy’s stock price fluctuations with Bitcoin’s market performance stat.

Trade-off: MSTR often swings more dramatically than Bitcoin itself, amplifying both the gains and the losses.

The Preferred Stocks

Next, we’ll explore Strategy’s preferred stock class. These are all perpetual stocks, meaning they don’t have a fixed expiry date. They are designed to appeal to income-focused investors seeking Bitcoin exposure through dividends. As we covered, these shares have priority over MSTR in a liquidation but sit below the company’s debt.

Figure: Expanded risk/reward table comparing STRF, STRK, and STRD based on coupon rate, convertibility, volatility, yield, and ideal investment use case.

STRF (Strife): The Senior Statesman

• Fixed 10% annual dividend (cumulative).
• Paid quarterly.
• Top priority among preferreds.
• Not convertible into common stock.
• Best for conservative, income-focused investors.

STRK (Strike): The Hybrid Play

• Fixed 8% annual dividend (cumulative).
• Convertible into MSTR at a pre-set price.
• Combines steady income with potential upside.
• Best for investors seeking both stability and growth opportunities

STRD (Stride): The High-Yield Risk

• 10% annual dividend (non-cumulative).
• Junior in the capital stack.
• Dividends can be skipped without obligation to repay.
• Suitable only for high-risk investors chasing yield.

STRC (Stretch): The Modern Money Market

• Cumulative monthly dividend, but variable rate.
• Designed to keep trading price near $100.
• Adjusts dividend rate up or down to stabilize price.
• Functions like a cash-alternative instrument.

MSTY: The Outsider’s Options Play

Finally, we have MSTY. And the first thing to say is crucial: MSTY is NOT a MicroStrategy product. It is an Exchange Traded Fund, or ETF, run by a third-party called YieldMax. MSTY’s goal is to generate high monthly income.

• Uses a synthetic covered call strategy on MSTR stock.
• Provides high monthly income but caps upside.
• Still exposed to downside risks if MSTR falls.
• Advertised distribution rates can be misleading (often a return of your own capital).
• Charges a 0.99% annual management fee.

Figure: YieldMax, a firm specializing in innovative income-generating investment strategies. Source: YieldMax ETFs

Proxy Investing vs. Direct Bitcoin Ownership

So, with all these options, the ultimate question is: why not just buy Bitcoin directly? Let’s break down the trade-offs.

Custody & Counterparty Risk

If you buy Bitcoin directly and hold it in your own hardware wallet, you have full self-custody. It’s the principle of “not your keys, not your coins.” You maintain absolute control over your asset, but you also bear full responsibility for its security.

When you invest in any of the Strategy securities, you introduce layers of counterparty risk. You are trusting:

• Michael Saylor and his management team.
• The company’s governance.
• The financial firms that hold the stock for you.

This is essentially a trade-off between convenience vs. control.

Accessibility & Tax Efficiency

For many, the biggest advantage of these securities is accessibility. You can buy and sell them through any standard brokerage account, just like any other stock.

• For UK investors, these securities can be held in tax-efficient wrappers such as a Stocks and Shares ISA or a SIPP.
• This is a major advantage not available for direct crypto holdings.

Inflation

Investing in Strategy stocks means dealing only in fiat currency, which can lose value over time due to inflation. You don’t directly hold Bitcoin, Strategy’s long-term store of value asset. As a result, your exposure to BTC’s potential upside is limited.

Conclusion

To pull all of this together, Strategy has brilliantly engineered a diverse suite of financial tools to funnel capital into its Bitcoin treasury. As you can see, there’s an option for almost every risk appetite.

• MSTR is for the high-risk growth investor.
• STRF is for the conservative income seeker.
• STRK is for the hybrid investor wanting income plus growth potential.
• STRD is the high-yield gamble.
• STRC is the innovative cash alternative.
• MSTY sits apart as a third-party product for generating income from volatility, but with significant risks to be aware of.

Ultimately, an investment in any of these tickers is a bet not just on Bitcoin, but on Strategy’s ability to manage its complex, leveraged corporate structure.

Outro & Affiliate Information

Do you invest in any or feel compelled to? Or do you believe in holding bitcoin as an asset yourself instead?

Because holding it securely in a hardware wallet in cold storage in something like a Trezor is key so you’re not leaving with a third party but have the bitcoin or digital asset yourself.

Figure: Trezor, a leading company providing secure hardware wallets for cryptocurrency storage and management.

The latest top-of-the-range model of Trezor is, the Trezor Safe 5.

Figure: Trezor Safe 5, a next-generation hardware wallet designed for secure cryptocurrency storage and management. Source: Trezor.

Also, for the ultimate safety of your crypto assets, protect your seed phrase with Cryptotag.

Figure: Cryptotag, a company known for its premium titanium backup solutions for securely storing cryptocurrency recovery phrases. Source: Cryptotag.

James also offers 1:1 coaching for those genuinely looking to educate themselves in the crypto space. You can find links to contact us at Coin Knowledge and book a free call to learn more.

If you’re looking for an easy way to track and stay on top of your crypto investments, you can check out CoinStats, which is the leading cryptocurrency portfolio tracker.

Figure: CoinStats, a comprehensive cryptocurrency portfolio tracker and management platform. Source: CoinStats.

There’s also Koinly, which is one of the best automated crypto tax platforms out there, and you can sign up for a free account.

Figure: Koinly, a cryptocurrency tax calculation and portfolio tracking platform.

If you’re looking for more personalised support with your crypto taxes.

Myna, a part of the Nephos Group, is one of the leading UK crypto tax accountancy firms that provides expert crypto tax advice, as well as services such as wealth management, restructuring, and offshoring.

Figure: Myna & Nephos Group, firms specializing in accounting, taxation, and financial services for digital assets and cryptocurrency businesses. Source: Nephos Group.

Crypto Tax Audit, a leading crypto tax company in the United States. So, if you need help with your crypto tax planning, definitely check them out.

Figure: CryptoTaxAudit, a professional service specializing in cryptocurrency tax compliance and IRS audit defence. Source: CryptoTaxAudit.

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