MicroStrategy’s Saylor Pushes Bitcoin-Backed STRC Stock Amid Record Bitcoin Profits and Regulatory Optimism

In brief

• MicroStrategy (STRAT), led by Michael Saylor, is aggressively marketing its Bitcoin-backed preferred stock (STRC) to retirees seeking higher yields than traditional savings accounts.
• STRC offers a 9.5% annual yield, contrasting sharply with typical savings rates of 0.1% to 4%, while providing short-term income with Bitcoin collateral backing.
• The company reported record Q2 profits of $10 billion, driven by Bitcoin’s price increase from around $77,000 to over $111,000, and holds a massive $74 billion Bitcoin portfolio (628,791 BTC).
• Saylor promotes STRC during an earnings call, describing it as an ideal investment for risk-averse income seekers. STRC features six times Bitcoin over-collateralization and a ‘120-year Bitcoin buffer,’ or 24 years even if Bitcoin drops 80%, according to Peter Chung of Presto Labs.
• The offering comes as the company emphasizes supportive crypto regulations and tokenizes ongoing quarterly preferred stock issuances.

Executive Chairman Michael Saylor Targets Retirees with STRC

During its Q2 earnings call, MicroStrategy CEO Michael Saylor positioned the company’s STRC preferred stock as an attractive yield play specifically for risk-averse investors and retirees, who are seeking alternatives to traditional cash accounts offering mere 0.1% to 4% returns.

Saylor explicitly targeted a large investor demographic during the call, stating, “This is interesting for retirees. It’s interesting for a whole class of people,” while highlighting the product’s appeal as a high-yield option without long-term commitments, unlike typical bonds.

STRC, the company’s latest perpetual preferred offering, functions as a short-duration, high-yield option relative to money market funds. It boasts six times Bitcoin over-collateralization and trades on NASDAQ with daily liquidity, distinguishing it from traditional preferred stocks.

Record Earnings Fuel Strategy’s Bitcoin Ambition

MicroStrategy’s Q2 performance underscored the financial impact of its massive Bitcoin treasury strategy, reporting record-breaking quarterly profit of $10 billion as the cryptocurrency’s price surged.

Guiding Bitcoin’s price growth from approximately $77,000 at the end of Q1 to over $111,000 in Q2, the company stated that even with delays in Bitcoin mining (a practice MicroStrategy supports for cost reduction) highlighting the ongoing challenges impacting long-term mining profitability, its Q2 results “exceeded our expectations.”

As of Q2, MicroStrategy’s holdings had grown to 628,791 BTC, valued at over $74 billion.

Risk Assessment and Structure

Daniel Braun, Sales Director at HedgeArbitrage, described STRC as offering path-dependent outcomes, contingent on Bitcoin’s price direction.REGISTERED

Peter Chung, head of research at Presto Labs, acknowledged STRC’s structure as mimicking money market fund economics while providing higher yields. He emphasized that registered investment advisors make the product decision for retirees and noted the substantial backing: “Strategy’s Bitcoin holdings are large enough to cover 120 years of these coupon obligations.” This buffer protects investors even if Bitcoin’s price collapses by 80%, which would only cover “roughly one-fifth of the $11 billion in organic coupon payments,” according to Chung.

Regulatory Optimism

Saylor, during the earnings call, expressed strong optimism regarding the regulatory environment. Following the White House’s release of a comprehensive 150-page crypto policy report the week prior, he stated the administration would “be very enthusiastic in its support of the entire crypto industry and the Bitcoin ecosystem,” framing supportive regulation as a pivotal factor for Bitcoin’s continued adoption and institutionalization.

The first tokenization of MicroStrategy’s Q2 earnings-related preferred stock issuance further represents the company’s push into the broader Web3 landscape.