MicroStrategy: the Birth of a Bitcoin Central Bank
- Andrew B. White
- Aug 3
- 4 min read
Updated: Aug 4
Introduction
When MicroStrategy recently rebranded to Strategy Inc., the move symbolized more than a corporate facelift. With over 600,000 BTC—worth upwards of $70 billion—on its balance sheet, Strategy has emerged as the world’s largest corporate holder of Bitcoin. But its profound innovation lies certainly not in hoarding Bitcoin, but in monetizing it: issuing a range of preferred instruments that could form the first true Bitcoin yield curve. This is what almost every mainstream financial analyst misses. Just as Bitcoin has been an unstoppable monetary, technological, and social revolution unfolding in plain sight yet too easily dismissed by most and understood by very few, Strategy’s financial innovation is equally revolutionary—and likewise poorly understood by the very people who should understand finance. Luckily, we Bitcoiners can once again help explain this new and equally important facet of the Bitcoin‑driven revolution.
I have spent the last few days going through the material posted by Strategy for investors and listening to Saylor and his colleagues’ podcasts and presentations about such instruments to gain a better understanding of them. The documentation is linked below. As a Bitcoiner, I am aware that simply hodling Bitcoin cannot be the only strategy. Bitcoin's maturation as a monetary asset means that financial services will be built on top of such unique and extraordinary asset. Its increasing adoption as THE global store of value will be driven by large financial institutions and the trillions of fiat money that they can deploy. I wrote about this in my book Bitcoindollar: The Dawn of American Hegemony in the Digital Era. Therefore, the largest market is composed of investors who do not want or cannot self‑custody Bitcoin but still want exposure to it. As much as we call this “paper Bitcoin” in a derogatory way, it is inevitable that this will happen. Therefore, it is necessary that Strategy and others - now called Bitcoin Treasury Co's - will cater to this market. It is important to understand what Saylor’s doing—because there are significant opportunities to benefit from their financial engineering and innovation such as earning yields on cash balances substantially higher than those offered by banks or Treasuries which can then be reinvested in Bitcoin. This approach simultaneously contributes to Bitcoin’s wider adoption and supports the broader Bitcoin ecosystem.
Among Strategy’s bitcoin‑backed financial instruments, two stand out, in my opinion, for their groundbreaking design and their appeal to bitcoiners seeking yield on cash balances along with optional exposure to Strategy’s common stock: STRC, a variable‑rate cumulative preferred, and STRK, a convertible preferred with embedded bitcoin upside.
Together, they suggest a startling possibility: Strategy is becoming the bitcoin central bank.
“Strategy’s instruments blur the line between bonds, equities, and stablecoins—anchored not to fiat credit, but to bitcoin itself.”
I. Strategy as the Bitcoin Central Bank
While Central banks issue currency, set interest rates and monetize government debt issued by the Treasury in the fiat monetary system, Strategy is starting to look like the equivalent of Central Banks in the bitcoin monetary system. Its role and innovation is arguably radical: it issues yield-bearing financial instruments denominated in fiat but backed by bitcoin reserves, a decentralized and censorship-resistant digital asset.
Liabilities: STRC, STRK, STRF, STRD—yielding securities linked to bitcoin value.
Reserves: Over 600,000 BTC, managed as a treasury reserve.
Function: Provide dollar-based yield products tied to bitcoin, creating a parallel financial system, while tapping the gigantic fiat credit markets hungry for higher yields tied to a digitally absolute scarce asset. Substantially a "speculative attack" on fiat money, see Chapter 35 "MicroStrategy's speculative attack on the dollar and its corporate Treasury strategy" pg. 178, footnote 344, Bitcoindollar the Dawn of American Hegemony in the Digital Era.
Strategy’s innovative bitcoin backed financial products could disrupt traditional safe-haven assets like government bonds globally and U.S. Treasuries in particular. As even institutional investors increasingly shift toward bitcoin-backed paper, governments will be compelled to integrate bitcoin into sovereign reserves and debt issuance. Again, I direct you to read my book Bitcoindollar the Dawn of American Hegemony in the Digital Era, to understand the concept of the “Bitcoindollar” as a substitute of the “Petrodollar” and the geopolitical implications of such massive transformation.
II. STRC: A Bitcoin-Backed “Stablecoin Bond”
Key Features
Variable Rate (~9%): Dividends reset monthly to maintain a trading band near $100 which makes this instrument behave effectively like a dollar denominated stablecoin.
Cumulative Payments: Missed dividends accrue, offering robust investor protection.
Bitcoin-Backed: Proceeds fund bitcoin purchases; returns indirectly tethered to BTC.
Price Stability: Floats around par, acting effectively like a yield-bearing stablecoin.
This design neutralizes duration risk—a problem plaguing fixed-rate bonds when interest rates spike—and introduces an entirely new hybrid: part bond, part stablecoin, and part bitcoin reserve note.
III. STRK: The Bitcoin Convertible
STRK combines steady income with equity-like upside:
8% Fixed Dividend: Quarterly payouts provide carry.
Convertible at 10:1: Becomes valuable if MSTR (common) surges toward ~$1,000.
Convex Price Action: Recently outpaced MSTR in correlation to BTC, reflecting speculative conversion/option value.
IV. Implications for Investors and Markets
Investor Benefits: Access bitcoin upside with structured downside protection; yields rivaling or exceeding high-yield bonds, with arguably the security of the most scarce asset on the planet.
Stablecoin Disruption: STRC’s yield-sharing model challenges zero-yield stablecoins, pressuring issuers to grant yield to users.
Sovereign Challenge: Bitcoin-backed instruments will rival Treasuries as safe collateral; central banks will be forced to adapt.
“If bitcoin is digital gold, Strategy’s preferreds are the first bitcoin-backed treasuries—offering yield, stability, and optionality.”
Conclusion
Strategy’s STRC and STRK are not just new securities—they herald a new monetary architecture based on bitcoin. By anchoring yields and capital structures to bitcoin, Strategy is building a parallel financial system where bitcoin replaces fiat denominated government debt as the reserve asset.
The implications are profound: sovereign debt markets, stablecoins, and central banking itself may soon revolve around a single question—how much bitcoin do you hold?
Links to Strategy's documentation and other podcasts interviews:
Nothing in this article constitutes investment advise. The purpose of this article was for my own research. Do your own research as well. Like every bitcoiner says: Do Not Trust Verify. I am not paid by Strategy nor I have any contact whatsoever with them.
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