The 'Stretch' securities carry high coupons of 8-10%, representing expensive long-term debt, and are non-cumulative, meaning missed dividends need not be repaid, which introduces risk if Bitcoin prices decline.

These preferreds are unique because they do not mature, pay guaranteed dividends, or give investor control, serving as a flexible way to finance Bitcoin purchases without diluting existing shareholders.

Since January 2024, Strategy has raised over $40 billion through various equity and fixed-income instruments, including approximately $6 billion this year from four preferred offerings, with notable retail investor participation.

The success of this model hinges on Bitcoin's value remaining stable; a decline in Bitcoin prices could threaten Strategy's ability to meet dividend obligations and maintain its capital structure.

Paying perpetual dividends using Bitcoin poses risks, especially if Bitcoin's value drops, potentially forcing Strategy to sell Bitcoin to meet obligations, although selling Bitcoin is off-limits in their strategy.

Supporters see the 'Stretch' preferreds as a clever way to buy Bitcoin without selling crypto, but critics warn that payouts could become costly if Bitcoin's price declines.

Critics like Jim Chanos have called the 'Stretch' notes 'crazy,' highlighting their high risk and Strategy's maxed-out leverage, which involves betting against the stock while holding long Bitcoin positions.

Saylor aims to shift away from traditional funding methods, planning to retire billions in convertible notes and issue more preferred stocks over four years to support his Bitcoin-centric strategy.

Saylor's aggressive approach underscores his unwavering conviction in Bitcoin, despite the high risks associated with this unconventional financing method.

Michael Saylor, chairman of Strategy (formerly MicroStrategy), is pioneering a risky new financing approach by issuing Bitcoin-backed perpetual preferred stock called 'Stretch' to fund Bitcoin acquisitions.

This innovative 'BTC Credit Model' aims to raise up to $100 billion, or even $200 billion if demand is strong, by creating income securities supported by Bitcoin, despite its volatility and lack of cash flow.

Strategy is developing a flexible funding structure with 'Stretch' preferreds that pay variable dividends, do not mature, and do not grant voting rights, blending features of debt and equity.