Strategy's advertised $13,400 Bitcoin floor for its STRC preferred stock outlines the price at which coverage drops to 1.0x, but this figure does not guarantee solvency or recovery for holders as market and asset conditions shift
Strategy, a company known for holding large Bitcoin reserves, is promoting a so-called "BTC Floor" of roughly $13,400 for its variable-rate cumulative perpetual preferred stock, STRC. While Bitcoin's spot price remains near $78,000, the company's filings clarify that this floor is not a guarantee of solvency or recovery for STRC holders. Instead, it represents the modeled Bitcoin price at which the coverage ratio for STRC falls to 1.0x, meaning the value of Bitcoin held would just match the notional claims covered by STRC. This calculation is based on a specific set of assets and liabilities and does not entitle STRC holders to any direct claim on Strategy's Bitcoin reserves.
How the Floor Is Calculated
The BTC Floor is derived from dividing the covered notional-essentially the sum of certain debts and preferred stock-by the number of Bitcoin held. According to the company's SEC filings, the denominator includes $6.714 billion in debt, subtracts $6.69 billion in USD assets, and adds $1.284 billion in senior STRF and $9.972 billion in STRC, totaling about $11.28 billion. With 840,447 Bitcoin on hand, valued at $77,004 per BTC in the company's dashboard, the coverage ratio stands at 5.7x. The unrounded floor price is $13,415, but both rounded and unrounded calculations are commonly cited as approximately $13,400. This figure is sensitive to changes in USD assets: if the company's $1.59 billion USD cash pool were depleted without reducing debt or preferred notional, the modeled floor would rise to about $15,313. If all $6.69 billion in USD assets were used up without retiring claims, the floor could reach $21,381.
Market Dynamics and Repurchase Activity
Recent filings show that Strategy sold over 18 million MSTR shares for $2.01 billion in a single week, using the proceeds to repurchase $136.4 million worth of STRC shares, add $300 million to its USD reserve, and increase its USD cash holdings. No Bitcoin was sold during this period. The funding for these moves came from new common stock issuance, resulting in dilution for MSTR shareholders. The company retains discretionary authority to repurchase up to $516.6 million in preferred shares and $1 billion in MSTR, but is not obligated to do so. The $5.10 billion USD reserve is earmarked for preferred dividends and debt interest, while USD cash can be allocated to Bitcoin purchases, repurchases, note repayment, or reserve growth. Neither pool is specifically pledged to STRC holders.
Implications for STRC Holders
STRC's cash dividends depend on board declaration and the availability of legally distributable funds. Missed dividends accumulate and compound, but the market price and payout timing can deteriorate before the modeled 1.0x coverage ratio is reached. In a restructuring scenario, creditors, subsidiary liabilities, and senior STRF holders would have priority over STRC holders, while junior preferred and MSTR common shareholders would rank below. The $13,400 floor is a snapshot based on a specific asset and liability mix, not a hard guarantee. Earlier stress points could arise from market access, available cash, or discretionary allocation decisions, potentially shifting costs among MSTR holders, STRC holders, and the Bitcoin reserve itself.
As of August 28, STRC closed at $97.33, reflecting a 12.33% effective yield based on a $12 annualized dividend. The company's dashboard, using an August 21 price of $96.18, listed a 12.48% yield, $9.972 billion notional, 59 basis points of BTC credit, 4.68% BTC risk, and a -14.61% BTC Floor ARR. These figures are subject to change as market conditions and company actions evolve.
The concept of a "BTC Floor" highlights the complexity of tokenized debt and preferred stock structures in the cryptocurrency sector. Unlike traditional bonds or equity, these instruments often rely on modeled coverage ratios that can shift rapidly with asset prices, liability management, and discretionary company decisions. Holders should be aware that such floors are not guarantees of recovery or solvency, and that actual outcomes in stress scenarios may depend on a range of operational, market, and governance factors beyond the headline floor price.
