Bitcoin Treasury Companies and Why They Issue Preferred Equity

STRC pays 11.5% a year right now, and SATA pays 13%. The question that stuck with me when I first started following them wasn't whether those yields were safe — it was simpler: why is a company built around Bitcoin so keen to pay out this much income in the first place? Bitcoin itself pays no dividend. So why would the businesses hoarding it hand double-digit cash yields to income investors? The answer is the whole logic of the Bitcoin-treasury model, and STRC and SATA — the two instruments I track on this site — are what falls out of it.

What a Bitcoin treasury company actually is

A Bitcoin treasury company holds Bitcoin as its dominant balance-sheet asset — ahead of cash, bonds, or anything a normal corporate treasurer would reach for. The thesis, which Strategy's Michael Saylor has spent years hammering home, is that Bitcoin's fixed supply makes it a better long-term store of value than currencies a central bank can simply print more of. These firms raise money for one purpose: to buy and hold more Bitcoin. Their share price then largely rises and falls with the value of that stack.

It is worth pausing on how strange this is. Traditional treasury management exists to do the opposite — preserve capital and keep cash liquid and boring. A Bitcoin treasury company deliberately swaps that safety for volatility because it believes the asset on the other side is worth it. Whether or not you buy the thesis, it is a genuinely new kind of company, and the income instruments it has spawned are new too.

Three ways to buy Bitcoin with other people's money

These companies can't throw off enough cash from their actual operations to fund Bitcoin purchases at the scale they want, so they go to the capital markets. There are really three doors:

1. Common stock — raises cash fast, but dilutes everyone who already owns shares.
2. Convertible debt — bonds that can turn into equity later; cheap up front, but a future obligation that has to be repaid or converted.
3. Preferred equity — instruments like STRC and SATA that raise capital at a fixed yield without diluting common holders and without debt's hard repayment date.

Preferred is the one I find most interesting, because it is the elegant compromise. The issuer gets capital without giving away ownership or signing up to a repayment deadline; the investor gets a known, repeatable cash yield instead of a bet on the share price. If you want the mechanics of how preferred sits between common stock and bonds, I laid that out in what is preferred stock.

Why the yields are so fat

An 11.5% to 13% cash yield is not normal for preferred stock — conventional preferreds pay a fraction of that. Two things explain the gap. The first is plain risk: heavy Bitcoin exposure, business models with barely any track record, and balance sheets that swing with a famously volatile asset all mean investors demand a hefty premium before they will part with their money this way.

The second reason is the one people miss — these instruments are competing with Bitcoin itself. Anyone weighing up STRC could instead just buy Bitcoin and reach for the upside. To pull that capital towards a fixed-income instrument, the yield has to be loud enough to be worth giving up the lottery ticket. So the fat yield isn't generosity; it is the price the issuer has to pay to win the argument against simply owning more BTC.

What actually backs the dividend

Here is the distinction that matters most, and the one most easily fudged. The dividend you receive is paid from cash and cash flow — not directly out of Bitcoin. Strategy and Strive don't sell a sliver of BTC every month to fund your payment; it comes from reserves and from the capital they keep raising. So the payment is a cash question. The health of the company standing behind it, though, is a Bitcoin question — if the price collapses and stays down, the balance sheet weakens even while near-term cash can still cover the dividend.

That split is the whole game for an income buyer. A short Bitcoin dip is mostly noise; a long, grinding bear market is the real risk, because it erodes the backing and the ability to raise fresh capital at the same time. I dug into exactly where these dividends rank against everything else a company owes in Strategy's capital structure, and into the instrument itself in how STRC works.

The two issuers I follow

Strategy (formerly MicroStrategy) wrote the playbook. It began buying Bitcoin in August 2020 under Michael Saylor, the first major public company to make BTC its primary reserve asset, and now holds more than 800,000 BTC — more than anyone else listed. STRC, its perpetual preferred, launched in July 2025 and has ratcheted its rate up steadily since. Strategy's approach is close to all-in: maximum Bitcoin, financed by a stack of instruments layered on top of it.

Strive, founded in 2022, comes at it more cautiously. SATA, its preferred equity, pairs a Bitcoin treasury with a deliberately conservative cash buffer — Strive has pointed to holding 13,000-plus BTC alongside something like 18 months of cash reserves, specifically so it can keep paying the dividend through a Bitcoin downturn. That dual-asset design — Bitcoin for the long-term bet, cash for the near-term promises — is the real difference between SATA and STRC, and it is why I read SATA's pitch as the more income-investor-friendly of the two, at least on paper.

What it means if you're buying for income

Buy STRC or SATA and you are not buying a bond, and you are not buying a conventional preferred. You are buying a high cash yield strapped to a company whose fortunes track Bitcoin and whose business model is still being stress-tested in public. That earns you more income than a traditional preferred — but the extra yield is not a free lunch, it is payment for genuinely higher risk. The number that decides what you actually earn, incidentally, is the price you pay going in; I'd get comfortable with effective yield before treating either one as an income substitute.

My own take is that these are worth understanding on their own terms rather than filing under "safe income." Treated as what they are — a new, higher-risk category that happens to pay like a junk bond and move like a crypto proxy — they can earn a place in an income portfolio. Treated as a savings account with a better rate, they will eventually teach you the difference the hard way.

I track STRC and SATA daily and hold positions in their parent issuers (MSTR and ASST). Everything above is how I think about the Bitcoin-treasury model myself — it isn't financial advice.

This article is for educational purposes only and does not constitute financial advice. Always consult a qualified financial adviser before making investment decisions.