CASE STUDY | The Financing Model that Fueled Rapid Expansion of Bitcoin Treasury Companies is Showing Signs of Strain

Strategy’s perpetual preferred stock, STRC, has fallen to its lowest level in 2026 exposing a growing challenge for Bitcoin treasury companies that rely on capital markets to finance Bitcoin purchases.

The latest drop is significant since an 11% discount to STRC’s $100 par value is a problem for a security specifically designed to trade near par.

The fall of STRC is being seen as proof that the financing model that fueled the rapid expansion of Bitcoin treasury companies is showing signs of strain.

The decline suggests investors are demanding greater compensation for holding securities tied to businesses whose value is increasingly driven by Bitcoin’s price. As the stock trades below its $100 par value, Strategy may have to offer higher dividends or other incentives to attract new capital making future Bitcoin accumulation more expensive.

The shift represents more than a temporary decline in one security. It raises broader questions about whether the Bitcoin treasury model can continue expanding if financing costs keep rising.

For much of the past two years, companies such as Strategy transformed their Bitcoin holdings into capital-raising machines. By issuing preferred stock and other securities, they attracted yield-seeking investors while using the proceeds to accumulate more Bitcoin, creating a cycle that depended on continued investor demand and favorable market conditions.

Because STRC is designed to trade near its $100 par value, persistent discounts force Strategy into difficult choices. The company can

• raise dividend payments to attract buyers,
• increase its cash reserves,
• offer additional investor incentives, or
• accept slower capital raising.

Each option comes with trade-offs that ultimately reduce the efficiency of buying more Bitcoin.

Bitcoin treasury companies have increasingly relied on financial engineering rather than operating cash flow to expand their crypto holdings. As long as capital remained inexpensive and investor appetite stayed strong, issuing preferred shares or equity provided a relatively low-cost source of funding.

However, once investors begin demanding materially higher returns, the economics deteriorate quickly.

Higher dividend obligations raise ongoing financing costs, while preferred shares trading below par limit a company’s ability to issue new securities without offering even more attractive terms. Companies can also resort to issuing additional common equity, but that risks greater shareholder dilution. Alternatively, they may be forced to slow Bitcoin purchases altogether undermining one of the primary drivers behind their investment thesis.

The pressure comes at a time when an increasing number of public companies are adopting Bitcoin treasury strategies inspired by Strategy’s playbook. Their success ultimately depends not only on Bitcoin appreciating, but also on maintaining consistent access to inexpensive capital.

That makes investor confidence as important as Bitcoin’s price itself.

If preferred shareholders continue demanding larger risk premiums, treasury companies may discover that accumulating Bitcoin becomes progressively more expensive precisely when market conditions are weakest. What began as a highly efficient capital-allocation strategy could increasingly resemble a conventional credit business—one where the cost of funding, rather than the price of Bitcoin, becomes the defining constraint on future growth.

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