High interest, no debt, no dilution, why are Bitcoin treasury companies aggressively pushing preferred stock financing?

Author: Micah Zimmerman

Compiled by AididiaoJP, Foresight News

Bitcoin-backed preferred shares — led by Strategy, with emerging players like Strive following closely — have grown into a market of approximately $13B in less than two years. These products have attracted substantial capital by offering high yields.

A research report published in June 2026 by BitcoinTreasuries.net in collaboration with DeFi protocol Apyx indicates that this expansion is only just beginning. The report tracks preferred shares issued by publicly traded companies, backed by their own Bitcoin holdings. The total market value of these securities is currently around $13B, accounting for nearly 1% of the global $1.3 trillion preferred stock market. The report's authors expect this share to rise to 3% to 5% by 2030, and potentially reach 10% — $1.3 trillion — in the long term.

This financial instrument sits at the heart of the funding challenges faced by companies holding Bitcoin as a treasury asset. Firms like Strategy, led by Michael Saylor, seek long-term capital to purchase more Bitcoin while avoiding dilution of common shareholders' equity and avoiding debt with fixed repayment terms. However, the extreme volatility of Bitcoin makes this balance difficult.

Bitcoin briefly approached a high of $124,720 in October 2025, then fell below $60k by mid-June 2026, with a maximum drawdown of about 47% over eight months.

Preferred shares offer a way around this dilemma. When a company issues preferred shares, the number of common shares does not increase, allowing existing shareholders to avoid equity dilution. These shares are classified as equity rather than debt, so they have no maturity date and no mandatory repayment. In exchange, holders receive dividends that are prioritized over common stock dividends.

For income-oriented investors who are otherwise shut out of Bitcoin's potential price appreciation, this structure transforms Bitcoin's volatility into a stable yield product.

Preferred Shares Drive Bitcoin Expansion

These yields far exceed fixed-income market levels. The effective yields on the top five Bitcoin-backed preferred securities in the U.S. range from 10.8% to 15.2%, compared to just 3% to 4% for high-yield savings accounts.

Strategy's products dominate the market: STRF, STRC, STRK, and STRD have a combined market value of nearly $13k. Strive, an asset management firm that transitioned into a Bitcoin treasury company, issued the fifth security, SATA, with a market value of approximately $330 million.

The report's core thesis is that demand far exceeds supply. Fixed-income institutions such as mutual funds, banks, pensions, and insurance companies hold $10.9 trillion in U.S. Treasury assets. If they were to shift 10 to 20 basis points of that into Bitcoin-backed preferred shares, that would generate $10.9 billion to $21.8 billion in demand — enough on its own to support the report's near-term market projections.

However, supply is constrained by the amount of Bitcoin available as collateral. Of the 20 million Bitcoin in circulation, holdings by exchanges, spot ETFs, and mining companies are excluded because they represent client assets or operational reserves.

What remains is 1.26 million Bitcoin held in corporate treasuries, worth about $83 billion. Strategy alone holds approximately 845k of those, or 67%.

Collateral coverage is the key safety metric highlighted in the report. Bitcoin-backed preferred shares maintain coverage ratios of 3.8x to 4.5x — meaning for every $1 of preferred equity, there is $3.80 to $4.50 worth of Bitcoin.

By comparison, the median home mortgage from large banks in Q3 2025 was $0.76 of loan per $1 of property value. "These instruments are significantly safer than 95% of bonds on the market," said Jeff Walton, Chief Risk Officer of Strive, in the report, "because they are backed by real capital, not future cash flows."

Not every company qualifies to issue such securities. Walton listed the requirements: a clean balance sheet (no senior secured debt), a size sufficient to support at least a $100 million issuance, and an experienced team in tax treatment, covenant design, and dividend policy.

He noted that Bitcoin already pledged as collateral takes priority over preferred equity, thus blocking most transactions. Strive itself used a $225 million SATA issuance in January to pay off debt inherited from its acquisition of Semler Scientific, a move that keeps all its Bitcoin unencumbered.

The risks are more structural than hidden. Strategy's common stock, MSTR, acts as a volatility amplifier, falling more than Bitcoin over the past year. "When Bitcoin's price drops, Strategy's stock price falls even harder," said Tony Lau, investment partner at Primitive Ventures, describing a potential cascading effect on the stock.

Three of Strategy's four preferred issues trade below their $100 face value. The ability to pay dividends depends on the company's ability to continuously raise capital as Bitcoin rises, though both Strategy and Strive have disclosed cash reserves sufficient to cover at least 12 months of payments.

Strategy CEO Phong Le told investors in February that unless Bitcoin falls to $8,000 and stays there for five or six years, the company's balance sheet will remain robust.

For now, the report describes preferred shares as being at a "0 to 1 moment" — market demand exceeds what issuers can supply, and this gap favors companies willing to build such products.