High Interest, No Debt, No Dilution: Why Are Bitcoin Treasury Companies Aggressively Pushing Preferred Stock Financing?

By: Micah Zimmerman

Compiled by: AididiaoJP, Foresight News

Bitcoin-backed preferred stock—led by Strategy, followed by emerging participants like Strive—has grown into a market size of approximately $13 billion in less than two years. These products have attracted significant capital by offering high yields.

A research report released in June 2026 through a collaboration between BitcoinTreasuries.net and DeFi protocol Apyx points out that this expansion has just begun. The report tracks preferred stock issued by public companies backed by their own Bitcoin holdings. Currently, the total market value of such securities is approximately $13 billion, accounting for nearly 1% of the global $1.3 trillion preferred stock market. The report authors expect this share to rise to 3% to 5% by 2030, and potentially reach 10% in the long term, equivalent to $1.3 trillion.

This financial instrument is at the core of the financing dilemma for companies holding Bitcoin as treasury assets. Enterprises like Strategy, led by Michael Saylor, seek long-term capital to purchase more Bitcoin while avoiding dilution of common stock shareholders' equity and without taking on debt with fixed repayment terms. However, the violent volatility of Bitcoin prices makes this balance difficult.

Bitcoin once approached a high of nearly $124,720 in October 2025, falling to below $60,000 by mid-June 2026, with a maximum drawdown of approximately 47% within eight months.

Preferred stock offers a path around the dilemma. When companies issue preferred stock, 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 there is no maturity date and no mandatory repayment. In exchange, holders receive dividends priority over common stock.

For income-oriented investors shut out by Bitcoin's price appreciation potential, this structure transforms Bitcoin's volatility into stable yield products.

Preferred Stock Drives Bitcoin Expansion

These yields far exceed fixed-income market levels. The effective yields of the top five Bitcoin-backed preferred securities in the U.S. range between 10.8% and 15.2%, while high-yield savings accounts offer yields of only 3% to 4%.

Strategy's products occupy the majority of the market share: the total market value of STRF, STRC, STRK, and STRD is close to $12.5 billion. Strive, an asset management company transformed into a Bitcoin treasury company, issued the fifth security SATA, with a market value of approximately $330 million.

The core point of the report is that demand far exceeds supply. Fixed-income institutions such as mutual funds, banks, pensions, and insurance companies hold $10.9 trillion in assets in U.S. Treasuries. If they shift 10 to 20 basis points of that capital into Bitcoin preferred stock, it would generate $10.9 billion to $21.8 billion in demand, enough to support the report's near-term market forecast alone.

However, supply is limited 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 belong to customer assets or operational reserves.

Remaining is 1.26 million Bitcoin held by corporate treasuries, valued at approximately $83 billion. Among these, Strategy alone holds about 845,000, accounting for 67%.

Collateral coverage ratio is the key to safety emphasized in the report. Bitcoin-backed preferred stock maintains a coverage ratio of 3.8 to 4.5 times, meaning every $1 of preferred stock equity corresponds to $3.8 to $4.5 of Bitcoin.

In comparison, the median for large bank housing mortgage loans in the third quarter of 2025 was $0.76 of loan per $1 of property value. "The safety of these instruments is significantly higher than 95% of bonds on the market," Strive Chief Risk Officer Jeff Walton stated in the report, "because they are backed by real capital, not future cash flows."

Not all companies are qualified to issue such securities. Walton listed the requirements: a clean balance sheet (no senior secured debt), scale to support at least $100 million in issuance, and a team experienced in tax treatment, covenant design, and dividend policy.

He pointed out that Bitcoin already pledged as collateral would take priority over preferred stock equity, thus hindering most transactions. Strive itself cleared debts inherited from the acquisition of Semler Scientific in January through a $225 million SATA issuance, keeping all its Bitcoin unencumbered.

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 prices fall, Strategy's stock price falls even harder," said Tony Lau, investment partner at Primitive Ventures, describing the potential chain reaction in stock prices.

Three of Strategy's four preferred stocks trade below the $100 par value. Dividend payment capability depends on whether the company can continue to raise capital when Bitcoin prices rise, 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.

Currently, the report describes preferred stock as an instrument at a "0 to 1" moment—market demand exceeds what issuers can provide, and this gap benefits those companies willing to build such products.