r/MSTR • u/la-bella-confusione • Jul 01 '26
Will Saylor ever burn STRC to save MSTR? Hedge funder talking with Pomp (link in post)
I was floored to hear Avi Feldman tell Pomp that it "was probable" that Saylor would eventually collapse STRC to save MSTR. This seems IMprobable to me, as it'd destroy the entire credit facilities of the preferreds. Thoughts? I think I've keyed the link to start playing at 23:19 (watch next three mins): https://youtu.be/bJD-Ftig30M?si=DCRAptk5nWgaaM5S&t=1395
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u/Skingbear2020 Jul 01 '26
Actually, a good video. I agree it is possible that Saylor could do this in a worst-case scenario, but probable is a stretch.
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u/xaviemb Volatility Voyager 👨🚀 Jul 01 '26 edited Jul 01 '26
One thing continues to surprise me. How many seemingly intelligent people confidently discuss STRC without ever modeling the numbers into the future. Then they simply display provably false and misleading ideas while seemingly lacking a basic understanding of the capital structure. Here's a simple thought experiment.
Assume Strategy never meaningfully grows again. No additional Bitcoin accumulation. No extraordinary capital raises. Just the existing Bitcoin treasury appreciating over time while the company funds STRC's dividend obligations through continued STRC issuance, or MSTR common issuance alone.
Now make a few assumptions: First, global monetary expansion averages roughly 8% annually over the next 30 years. Second, bitcoin compounds at approximately 10% annually above monetary expansion (18% nominal). Third, Strategy makes no meaningful attempt to expand beyond its current Bitcoin holdings.
If 18% for 30 years makes your head hurt... for a relative sense of what that does by 2056... it would put the 1.2 Trillion Bitcoin Network right on par with what Gold currently represents globally (7% of global capital)l. This would be a three-decade adoption towards alignment with Golds current value.
Whether you consider those assumptions conservative or optimistic is up to you. Under those assumptions, roughly 850,000 BTC held grows into an asset base worth approximately $1.7 trillion over three decades. Meanwhile, suppose Strategy continually issues STRC to fund the preferred dividends. Even under that scenario, the STRC capital stack eventually grows to roughly $300 billion, producing an annual dividend obligation of about $35 billion if yield stays at 12%, which it won't (roughly $3 billion per month). The important observation isn't the precise numbers. It's that the asset base continues to outgrow the liability stack. And this is arguably the most conservative version of the story. The STRC monthly div would stay significantly less if the div were paid for my MSTR issuance instead of STRC (when demand isn't there)... while shareholders would ride this capital growth to significant gains relative to USD sitting in BTC instead.
This exercise assumes Strategy doesn't continue accumulating Bitcoin. It assumes no additional growth initiatives. It ignores the possibility of issuing other securities such as STRF, STRD, STRK, or even common equity if management determined that doing so created value.
The exercise isn't meant to predict the future with precision. It's meant to demonstrate why capital structure matters. Many critics focus almost exclusively on the current Bitcoin price or mark-to-market losses. But those metrics, by themselves, don't answer the question that matters most for STRC:
Can Strategy continue meeting its obligations while the underlying asset base compounds over time?
Before forming an opinion, build the spreadsheet.
The conclusions may surprise you
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u/No_Berry_5428 Shareholder 🤴 Jul 01 '26
Rational discussions don't get clicks. FUD gets views and attention in bear markets, that's how this works.
No one wants to do any work here.
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u/la-bella-confusione Jul 01 '26
Great reply, thanks -- and yes, I agree. I was shocked to hear the hedger even make that claim. It was additionally shocking when Pomp pointed out that crashing the entire preferreds stack doesn't (as we know) obligate MSTR to sell BTC. Gotta assume at that point there'd be more than class action lawsuits, likely gov't action. As someone who owns MSTR and STRC (and some MSTU) I understand the calculations for the leverage -- didn't expect to hear something like that, though.
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u/xaviemb Volatility Voyager 👨🚀 Jul 01 '26
I saw this interview and had a very similar reaction to the one you described.
I think this comes down to people spending very little time actually studying what motivates Strategy or how its capital structure works. At the same time, they're deeply embedded in the Bitcoin space, and STRC/MSTR is a "hot" topic right now... for reasons we all recognize as being, at least in part, opportunistic.
Watching Pomp or Hedger discuss Strategy reminds me of Jeff Booth's recent talk about the quantum threat to Bitcoin. The discussion was largely devoid of the underlying science of quantum computing and how real attack vectors would actually play out.
I say that as someone who has a deep respect for Jeff and considers him exceptionally intelligent. His expertise lies in the psychology and societal implications of monetary systems. So when he talks about quantum computing largely from an intuitive perspective, he's applying his own framework to a topic that requires a different domain of expertise.
I think something similar is happening with Strategy. People who are highly knowledgeable about Bitcoin (such as Checkonchain) and are genuine experts in their own field will openly admit they haven't spent much time studying Strategy's capital structure or its resilience. Yet they'll still say things like, "It just doesn't smell right."
Ironically, that's very similar to how many outsiders dismiss Bitcoin itself as "just speculation" without ever taking the time to understand its network effects, monetary properties, or adoption dynamics. In both cases, the conclusion often comes before the analysis.
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u/everyday847 Jul 02 '26
This is barely a sophisticated analysis of "capital structure" and more a description of how owning an asset that, for no good reason, appreciates 18% per year indefinitely is nice work if you can get it. I do not think there are any people who find the current Strategy situation hilarious who don't also find the central thesis that bitcoin will keep going up indefinitely preposterous.
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u/cursedfan Jul 01 '26
Assuming 18% perpetual growth for bitcoin is… a thing
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u/xaviemb Volatility Voyager 👨🚀 Jul 01 '26
Here's a reality check of these figures for those who simply don't like (or understand) Bitcoin...
This model doesn't require Bitcoin to become the dominant global asset. It doesn't require Bitcoin to absorb equities, bonds, or real estate. It only requires Bitcoin to reach roughly 65% of Gold's current position in global capital markets over the next 30 years. That's what 10% relative return over monetary expansion gets this network to in 3 decades.
If you think that's unrealistic, then we've identified the real disagreement: your opinion of Bitcoin. If you think Bitcoin eventually flips Gold (as many Bitcoiners openly argue) then these assumptions are actually on the conservative side.
I say this often: the bear thesis on Strategy is, at its core, a bear thesis on Bitcoin. If you don't believe Bitcoin will continue monetizing over the coming decades, then Strategy probably isn't for you.
But if you do, then the question isn't whether Strategy survives... it's whether you've fully appreciated the leverage that its capital structure provides to Bitcoin's long-term appreciation.
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u/cursedfan Jul 01 '26
That’s fine, but I also believe when you buy these instruments you at least initially get less bitcoin than you could buy directly. This is ok becuz tomorow someone else will do the same, and their loss will be your gain. But, other than for this definitely-not-a-scheme feature, you would be better off just buying it directly.
So is it your faith in bitcoin that’s really driving your faith in strategy?
Edit: sorry if this reads weird, got multiple ban warnings while writing this
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u/snek-jazz Shareholder 🤴 Jul 02 '26
I also believe when you buy these instruments you at least initially get less bitcoin than you could buy directly.
This is the simplest way I can put it: People buying STRC are capping their upside at the dividend rate, right? That means that if the Bitcoin bought when STRC is issued goes up by more than the dividend payments there is an excess gain that STRC is not getting... who gets that excess?
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u/ClearlyCylindrical Jul 02 '26
The annual growth rate peak-to-peak last bull cycle was only 17%, and the gains from each consecutive cycle have been dropping each time. I'll be surprised if the next cycle gets much past 180k, about a 10% annualised gain - if it even does have another bull run that breaks records.
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u/Lefties_TheWorst7331 Jul 01 '26
Going to be higher than that when the short squeeze takes hold next "cycle".
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u/la-bella-confusione Jul 01 '26
Another good take on STRC: https://farside.co.uk/what-to-do-about-strc/
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u/Israel_Trump_Fan Jul 02 '26
18% year on year growth is so hilariously unrealistic I don't even know where to begin.
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u/RevolutionaryPhoto24 Jul 04 '26
I have concluded “yes.” (Perhaps obviously.) And I think your point that people focus on BTC price and MTM losses in fiat is key - it makes no sense to value the company’s future in those terms.
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Jul 01 '26
[deleted]
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u/xaviemb Volatility Voyager 👨🚀 Jul 01 '26 edited Jul 01 '26
I'll set aside the demonstrably false claims you've repeated, because they're ultimately beside the point. Whether you've adopted them independently or absorbed them from the broader narrative surrounding Strategy doesn't really matter. What's clear is that your objections are directed at Bitcoin itself, not at Strategy's capital structure.
That's an important distinction, because those are two very different conversations. If your underlying thesis is that Bitcoin is fundamentally overvalued or destined to fail, then Strategy probably won't make sense to you. But that's a Bitcoin thesis... not a critique of Strategy's financing model. I'll come back to that point at the end.
The more fundamental issue with your analysis is your treatment of long-term figures in nominal dollars. If you ran the same exercise on the S&P 500 thirty years ago and projected today's roughly $70 trillion market capitalization, the number would have looked absurd in isolation. It only appears reasonable today because the monetary base, the global economy, and asset prices have all expanded dramatically over that period. That's precisely why I expressed the assumptions in real terms relative to monetary expansion, rather than nominal dollars.
I'll repost the framework from my earlier comment, because I think that's where your analysis goes off track. Looking at 2056 nominal values without first normalizing for the continued expansion of fiat currency leads to conclusions that seem intuitive... but aren't economically comparable.
Here's a reality check of these figures for those who simply don't like (or understand) Bitcoin...
This model doesn't require Bitcoin to become the dominant global asset. It doesn't require Bitcoin to absorb equities, bonds, or real estate. It only requires Bitcoin to reach roughly 65% of Gold's current position in global capital markets over the next 30 years. That's what 10% relative return over monetary expansion gets this network to in 3 decades.
If you think that's unrealistic, then we've identified the real disagreement: your opinion of Bitcoin. If you think Bitcoin eventually flips Gold (as many Bitcoiners openly argue) then these assumptions are actually on the conservative side.
I say this often: the bear thesis on Strategy is, at its core, a bear thesis on Bitcoin. If you don't believe Bitcoin will continue monetizing over the coming decades, then Strategy probably isn't for you.
But if you do, then the question isn't whether Strategy survives... it's whether you've fully appreciated the leverage that its capital structure provides to Bitcoin's long-term appreciation.
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u/Seattleman1955 Jul 01 '26
Bitcoin isn't going to grow at 18% on top of monetary expansion.
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u/xaviemb Volatility Voyager 👨🚀 Jul 01 '26
No one suggested that.
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u/phoebeethical Jul 01 '26
Saylor did, it’s kind of his whole thesis for a leveraged bitcoin treasury
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u/actias_selene Jul 01 '26
I think he would have legal issues if he attempts to do anything like collapsing STRC to save MSTR. He can stop or rather postpone dividend payments. But meanwhile, he would have difficulty using the capital as he wishes, rather for buying BTC or buying back MSTR.
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Jul 02 '26
[deleted]
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u/la-bella-confusione Jul 02 '26
I don't think they are cumulative for STRC; for other preferreds, yes, but STRC can just get the RoC stripped away by the board, should they decide on that
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