Strategy Inc. has executed a major financial maneuver, raising roughly $16 billion this year through debt and preferred obligations without triggering a taxable event. The company avoids capital gains tax by borrowing against its Bitcoin holdings instead of selling them.
The firm, which rebranded from MicroStrategy in February 2025, has built a capital machine using leverage. It has raised approximately $21 billion through common equity, convertible debt, and a $2.5 billion perpetual preferred stock issuance called Stretch, which offers investors an 11.5% dividend yield.
All capital raised flows directly into purchasing more Bitcoin, solidifying Strategy's position as the world's largest corporate holder of the cryptocurrency. The Digital Credit Capital Framework allows for regulated sales of up to $1.25 billion in Bitcoin to sustain dividend payouts during market volatility.
Proponents, including co-founder Michael Saylor, argue this creates a new asset class and a digital credit market that could scale into the trillions. However, the entire model is a highly leveraged bet on Bitcoin's price. The company's total obligations sit at around $16 billion, with no traditional software business generating significant cash flow to serve as a buffer.
If Bitcoin enters a prolonged bear market, the collateral value shrinks while fixed obligations remain. This could force Strategy to sell Bitcoin at depressed prices to service its dividends and debt.