Strategy (NASDAQ: MSTR) restructured its corporate operations to function as a credit issuer backed by digital assets. The move follows a 48% stock correction that erased the company’s long-standing market premium. Executive Chairman Michael Saylor initiated the pivot after shares fell to trade near Net Asset Value (NAV) in late 2025.
The company officially launched its “Digital Credit Factory” model in December. The initiative treats the firm’s 672,497 Bitcoin treasury as Tier-1 collateral rather than a speculative hold.
Strategy now focuses on manufacturing yield through the issuance of specialized preferred equity lines known as Series STRD and STRF. These instruments offer investors effective yields approaching 10% through a “Return of Capital” (ROC) structure.
U.S. tax codes generally classify ROC distributions as a reduction of the investor’s cost basis rather than immediate taxable income. The mechanism allows Strategy to monetize the volatility of its balance sheet without triggering taxable events by selling the underlying Bitcoin.
Strategy: Fortifying the Cash Moat
Market volatility prompted the firm to fortify its balance sheet against a “crypto winter” environment. Bitcoin prices retraced from August highs of approximately $118,000 to the $87,000 range by year-end.
Strategy established a $1.44 billion cash reserve in December to secure its dividend obligations. The capital pool covers roughly 21 months of fixed payments.
It decouples corporate solvency from daily spot market fluctuations. Investors have historically paid a premium for MSTR shares to gain exposure to Bitcoin. That dynamic shifted in late 2025.
The stock traded at multiples as high as 2.5 times the value of its holdings during the 2024 mania. It collapsed to trade at or slightly below NAV by December.
The S&P 500 Standoff
The valuation reset followed a decision by the S&P 500 Index Committee to exclude Strategy from the benchmark in September. The committee cited qualitative concerns regarding the firm’s non-traditional business model.
This occurred despite Strategy reporting a record $10 billion GAAP net income in Q2 2025. The earnings surge resulted primarily from new Financial Accounting Standards Board (FASB) fair-value rules rather than software revenue growth.
Analysts view the pivot as a necessary evolution for a company unable to rely on passive index inflows. “The premium was a bug to the index committee but a feature to us,” a source close to the firm’s capital markets desk stated. “We stopped selling equity to buy Bitcoin at a premium. We now issue credit against a hard asset to generate yield.”
Strategy: By The Numbers
- Total Bitcoin Holdings: 672,497 BTC (Approx. 3.2% of total supply)
- Average Cost Basis: $74,997 per BTC
- Cash Reserve: $1.44 billion (covering 21 months of fixed obligations)
- Market Cap: ~$58 billion (trading near parity with Bitcoin holdings)
Chain Street’s Take
Saylor executed a structural pivot rather than a retreat. The $1.44 billion cash moat immunizes the company against the volatility that typically destroys leveraged structures.
The market’s reversion to NAV provides the stability required for a credit rating rather than a tech valuation. Strategy has effectively become a closed-end fund with a printing press.
The bond market historically favors predictable yield over the growth narratives demanded by the S&P 500. Saylor isn’t trying to join the index anymore. He’s building his own.
