Saylor Claims Digital Credit is the Product, Equity is the Byproduct
Michael Saylor, founder of Strategy, stated in an interview that the company is creating digital credit products. If this product is effective, it could sell billions of dollars in credit.
He cited that selling $1 billion in digital credit only requires Bitcoin to outperform a threshold yield of about 10.5%. If Bitcoin appreciates by 10% annually, the company effectively gains $1 billion in net profit, which it never has to repay. If it sells $10 billion in credit annually and Bitcoin appreciates by 10.5%, it would be equivalent to a company generating $10 billion in net profit.
If this figure grows by 20% or 30% annually, the company's value could be 10 to 20 times its net profit, which represents a net asset value (NAV) premium. Saylor stated that MSTR's future depends on converting capital and Bitcoin into credit, thereby generating digital equity.
He mentioned that if the credit product is good, equity performance will outperform Bitcoin. Therefore, credit is the product, and equity is merely a byproduct. For the company, repurchasing credit is a better use of funds because if the credit is effective, the stock should trade above NAV premium.
If credit is allowed to disappear, the company would only be a holding company, and the stock price could only fluctuate around NAV. Saylor emphasized the need to defend this credit product. Strategy has launched preferred securities like STRC as vehicles for digital credit.
Bitcoin-holding companies amplify equity value by issuing credit products, driven by optimized capital structure; investors purchase digital credit to gain returns, and the company covers the threshold yield with Bitcoin appreciation, while equity holders benefit from NAV premium, making the sustainability of credit products key to maintaining the premium.
Source: Public Information
ABAB AI Insight
Strategy builds digital credit through the issuance of preferred securities like STRC, transforming Bitcoin holdings into revenue-generating credit products, and using the proceeds to continue increasing Bitcoin holdings; historically, the company has shifted from simple holdings to structured financing, introducing the Digital Credit Capital Framework in 2026, which includes USD reserves and repurchase authorization.
Capital enters through the sale of digital credit, with a threshold yield of about 10.5%. If Bitcoin appreciates to cover this level, credit issuance creates a positive spread and supports NAV premium; the motivation is to position credit as the core product and equity as a byproduct, prioritizing the repurchase of credit to maintain the premium, rather than allowing credit to disappear and degrade into a pure holding company.
This is similar to traditional financial institutions amplifying underlying asset returns through the issuance of preferred stock or structured products; currently, Strategy is in a phase where credit products drive equity premium, focusing on extending from merely holding Bitcoin to credit creation and capital management.
Essentially, this involves a transfer of pricing power: the pricing power of credit products determines whether the company can continue to trade above NAV. Once the underlying Bitcoin appreciates to cover costs, the remaining spread belongs to equity; the mechanism is that the sustainability of credit supports the premium, and if credit disappears, the premium disappears. The company must actively defend credit products to maintain its valuation structure.
ABAB News · Law of Cognition
- Credit is the product, equity is the byproduct of credit sustainability.
- Once the threshold yield is covered, the remaining appreciation becomes NAV premium.
- Repurchasing credit is equivalent to keeping the pricing power of the premium in one's own hands.