Strategy's (MicroStrategy's) Capital Structure Explained

Short answer: Strategy finances its 849’327 bitcoin with three kinds of capital stacked on top of each other. At the top are convertible notes of $6.71 billion, below them five preferred stocks in the order STRF, STRC, STRE, STRK and STRD, and at the bottom the common stock MSTR. Whoever stands higher gets paid first. On Nov 13, 2026, the bitcoin covers all claims ahead of the shareholders about three times.

If you buy a Strategy preferred stock or MSTR, you are not buying bitcoin but a place in a queue. Here you see the whole queue, what it costs every year and how much buffer is left at different bitcoin prices. Whether MSTR makes sense as an investment is covered in the profile Strategy Stock (MSTR).

The principle: a queue

On one side are Strategy's bitcoin and cash. On the other side are the investors who paid for them, standing in a fixed order:

• At the front are the holders of the convertible notes. They have a right to interest and repayment.
• Behind them the preferred shareholders. They have a right to a dividend, but only after the creditors.
• At the very back the common shareholders (MSTR). They own whatever is left.

If bitcoin rises, the entire gain goes to the common shareholders. If it falls, they lose first. In finance this is called ranking or seniority: "senior" means you get paid first.

You can see these layers as bars in the capital structure on the Digital Credit page. It recalculates them daily with the current bitcoin price.

The asset side: bitcoin and the USD reserve

On Nov 1, 2026, Strategy owned 849’327 BTC. That is about 4% of all 21 million bitcoin that will ever exist. At $70’941 on Nov 13, 2026, they are worth about $60.25 billion (about €54.4 billion).

On top of that comes a USD reserve of $4.79 billion. Strategy built it up in 2026 from sales of new shares, to pay interest and dividends without selling bitcoin.

Important for everything that follows: no bitcoin is pledged. Strategy has no loan where a lender could demand more collateral or force a sale of bitcoin when the price falls. The claims are against the company as a whole, not against specific coins.

The layers from top to bottom

As of Nov 6, 2026, per the Strategy dashboard and SEC filings; interest is the remainder of the total of $1.51 billion that Strategy states.

Ahead of all shares: the convertible notes

Strategy's debt consists almost entirely of convertible notes: six issues totalling $6.71 billion, with 0 to 2.25% interest and maturities from 2028 to 2032. The interest is low because buyers receive an option: if MSTR rises above the conversion price, they swap the note for shares. The debt then disappears and there are more shareholders.

If the stock stays below, Strategy has to repay the amount in cash. One note of $1.01 billion already appears in the balance sheet at Sep 30, 2026, as due within a year. For the ranking, the notes therefore count at their full amount.

Interest is an obligation: missing it is a default. That is why the notes stand ahead of all shares.

Rank 1 to 5: the five preferred stocks

The preferred stocks, which Strategy calls "Digital Credit", have no maturity and no repayment date. They pay a dividend on a face value of $100 (STRE: €100). Unlike interest, a dividend is not a legal obligation: Strategy can suspend it without going bankrupt.

What happens then depends on the security:

• STRF, STRC, STRE and STRK are cumulative. A suspended dividend becomes an amount owed to these shareholders and must be paid later.
• STRD is non-cumulative. A missed dividend is lost.
• STRK can be converted at any time into 0.1 MSTR shares per share. Strategy may also pay its dividend in MSTR shares instead of cash.

The order STRF, STRC, STRE, STRK, STRD applies to dividends and to the worst case. The higher rank costs yield: at the same 10% rate, STRF yields less than STRD because buyers pay a higher price for the safer place. Which security suits whom is covered in STRF, STRK, STRD, STRE Compared. The largest one, STRC, with its monthly adjusted rate, is explained in STRC (Stretch) Explained.

At the very back: MSTR common stock

At the back stands MSTR. It pays no dividend and has no fixed claim. It owns the rest: all the bitcoin and the reserve, minus everything the layers ahead of it claim. That is why it acts like leverage on bitcoin. How strong, the MSTR profile works out.

Who gets paid first?

In normal operation it is about the yearly payments. First Strategy has to pay the interest. Then come the preferred dividends. Under the terms of the securities, as long as dividends on a senior security are outstanding, Strategy may pay nothing on junior ones. If money runs short, STRD is hit first, then STRK, and so on towards the front.

In the worst case, if Strategy were wound up, the same order applies to the assets. First the noteholders receive their full amount. Then STRF receives its face value (for STRF at least $100 per share), then STRC, and so on. Each layer only gets what is left after the layers ahead of it.

This is a thought experiment: Strategy is not wound up just because bitcoin falls. But it shows how much bitcoin stands behind each layer.

The yearly cost compared with the holdings

Add up the table above and Strategy pays about $1.45 billion in preferred dividends and about $0.06 billion in interest per year, together about $1.51 billion. More than two thirds of it goes to STRC alone.

Strategy does not pay this from its software business, but from the USD reserve, from selling new shares and, if both fall short, from selling bitcoin. That already happened in 2026: in the second and third quarters Strategy sold 6’947 BTC, partly for dividends.

The cost is fixed in dollars. Measured in bitcoin it grows when the price falls:

The reserve buys time. For a little over three years Strategy does not need to sell bitcoin for dividends, even if nobody buys new shares. After that it depends on the capital market again. What that means for you as a preferred shareholder is covered in The Risks of Bitcoin Preferred Stocks.

Coverage at different bitcoin prices

The BTC coverage of a layer says how many times the bitcoin could pay everything ahead of that layer, the layer itself included. The BTC price at 1× is the price at which it is exactly enough. How to read both figures and what they leave out is explained in Effective Yield, BTC Coverage and BTC Price at 1×. Here it is about the whole picture: this is what the entire structure looks like at different prices.

Bitcoin only, without the USD reserve. Holdings 849’327 BTC (Nov 1, 2026), claims at face value (Nov 6, 2026), STRE converted to dollars.

In euros, the BTC price at 1× is about €8’500 for STRF, about €17’200 for STRC and about €21’100 for STRD (in francs about CHF 7’900, 15’900 and 19’500; $1 = €0.904 = CHF 0.835).

Three things stand out:

1. STRC is the big step. At $8.18 billion, STRC is larger than all the debt combined. Coverage drops from 7.5× at STRF to 3.7× at STRC. Everything behind STRC is therefore only slightly worse off than STRC itself.
2. The last three sit close together. Only $3’300 separates STRE, STRK and STRD in BTC price at 1×. They differ more in their terms (euros, conversion, non-cumulative) than in coverage.
3. The shareholders carry the leverage. If bitcoin halves from $100’000 to $50’000, the rest for MSTR falls from $65.1 to $22.6 billion, about two thirds.

For comparison: the floor of the Power Law model was about $67’000 on Nov 12, 2026. If bitcoin stood there, even the claims down to STRD would still be covered about 2.9 times. The floor is a model value, not a guarantee.

How the ATM program drives the purchases

The capital structure is not fixed. It grows every week. The tool for this is the at-the-market program, ATM for short. Strategy continuously sells new securities directly on the exchange, in small amounts at the current price, without a large offering. Such programs exist for MSTR and for the preferred stocks.

With the proceeds Strategy buys bitcoin or tops up the USD reserve. Each kind of security changes the structure differently:

• New MSTR shares add no new layer. They spread the rest over more shares. Coverage of the preferred stocks rises because more bitcoin stands behind the same claims.
• New preferred shares enlarge a layer. If Strategy buys bitcoin with them, the holdings grow too. For the layers behind, coverage still falls because more claims stand ahead of them. Every new STRC thus lowers the coverage of STRE, STRK and STRD.

Whether a new MSTR share helps or hurts existing shareholders depends on the price. If the share costs more than the bitcoin it holds net, bitcoin per share rises. If it costs less, it falls. That premium or discount is measured by mNAV, explained in mNAV Explained. In 2026, mNAV was at times below 1×, and Strategy put part of the ATM proceeds into the reserve instead of bitcoin.

Rule of thumb: The structure only grows as long as investors buy new securities. If they stay away, the reserve pays first and the bitcoin holdings after that.