What is STRC, the Strategy preferred stock that pays 12%

Imagine a stock that doesn't want to go up. It is designed to stay pinned at $100 and pay you 12% per year for not moving. It exists, it is issued by Strategy (formerly MicroStrategy), and it is called STRC. For many people, it is "Saylor's Bitcoin that also pays," and that is where the confusion begins: STRC is not Bitcoin. It is the other side of the table. This article explains, without jargon, exactly what it is, how it works, and what you are truly buying when you purchase one.

What is STRC in a single sentence?

STRC is a stock that behaves like a bond. Its full name —"Strategy Variable Rate Series A Perpetual Stretch Preferred Stock"— sounds like a tongue twister, but every word tells part of the story: it is a preferred stock (paid before common stock), perpetual (it never matures), and variable rate (its payment adjusts). It hit the market in July 2025.

The fastest way to understand it is by contrast. When you buy Bitcoin, you own the asset: if it goes up, you win; if it goes down, you lose. When you buy STRC, you do not own Bitcoin: you are lending money to the company that buys Bitcoin in exchange for a fixed coupon. It is the difference between owning an apartment and being the bank that provides the mortgage to the buyer. The owner gets the appreciation; the bank gets the interest and, in exchange, assumes the risk of the loan being repaid.

How does it manage to stay stuck at $100?

The engineering trick that defines STRC is simpler than it seems: it functions like a thermostat. A thermostat turns up the heat when it is cold and lowers it when it is hot to keep the temperature constant. STRC does the same with its dividend to maintain the price at 100 $.

The mechanism is based on the average trading price of the last five days (what the stock market calls VWAP, the volume-weighted average price):

• If the price falls below $95, the dividend rises by at least 50 basis points (half a percentage point) to attract buyers.
• Between $95 and $98.99, it rises by 25 basis points.
• Between $99 and $100.99, it does not change: it is where it should be.
• Above $101, it drops by 25 basis points.

For payments with a record date starting in July 2026, the coupon stands at 12% annually based on a reference value of 100 $, and here is a revealing fact: STRC launched paying 9.00% and the mechanism has been raising it step by step up to 12%. In other words, the thermostat has been "turning up the heat" for some time, meaning that STRC has been trading below par and has needed to sweeten the coupon to support the price. When the price falters, the coupon rises, buyers return, and the price moves back toward par — at least in theory: since mid-June 2026, the thermostat has been facing its first serious test, with the price fluctuating between 74 and 89 $ for weeks (around 88 $ on July 22) despite the coupon increase to 12%. The mechanism pushes toward 100 $ at all times, but it no longer guarantees reaching it. Until June 2026, that dividend was paid once a month; following a shareholder vote on June 8, 2026, it switched to bi-weekly payments: the first bi-weekly payment was made on July 15, 2026, and the next one, already at 12%, is declared for July 31.

What are you actually buying: Bitcoin or a promise?

This is the question most people skip, and the most important one. Whoever buys STRC has no exposure to Bitcoin: they have a right to payment from Strategy. If Bitcoin skyrockets 200%, the STRC holder still collects their 11.50% and nothing more: the appreciation does not reach them. And if Strategy were to have trouble paying, their coupon would be at risk even if Bitcoin were at all-time highs.

The legal nuance matters: STRC is an unsecured preferred share. There is no separate pile of bitcoins set aside and reserved for STRC holders. Strategy holds 843.775 BTC as of July 19, 2026 —after selling approximately 3.620 BTC between May and July to pay dividends—, a mountain of collateral, but those bitcoins back the entire corporate structure, not STRC specifically. "Backed by Bitcoin" describes the group's balance sheet, not a pledge of collateral in your name. Returning to the analogy: you are the bank that lent to the property buyer, but without a registered mortgage on a specific apartment; you are a creditor of the person, not the owner of the brick.

That also defines your place in line if things go wrong. In a bankruptcy, the company's debt (including convertible notes) is paid first; then, preferred stocks like STRC; and finally, the common stock (ticker MSTR). The word "preferred" sounds safe, but it only means "preferred over the common shareholder"; you are behind all creditors with debt. And, since there is no dedicated collateral, what you would recover depends on what is left after paying those creditors. It is the typical risk that is ignored while everything is going up and becomes the only thing that matters when something breaks.

What does Strategy use the raised money for?

The answer is absolutely consistent with everything the company does: it buys more Bitcoin. Strategy issues preferred shares like STRC, raises billions, and converts them into BTC for its treasury. It is the engine of its famous "accumulation machine."

That engine has a technical name —the flywheel— and a reflexive logic: Strategy's stock trades above the value of its bitcoins (a premium measured in the sector by the so-called mNAV, i.e., the market value of the company versus the net value of the bitcoins it holds), and that premium allows it to issue cheap capital to buy more BTC, which reinforces the narrative, which sustains the premium. We explain this in detail in how Strategy's reflexive flywheel works. STRC is one of the fuels for that machine: the investor seeking income provides the money, and Saylor transforms it into Bitcoin for the company's long term.

It is worth knowing where the money to pay you actually comes from. Strategy's software business generates cash, but it falls far short of the cost of preferred dividends: STRC alone, at 12% on approximately 8,500 million dollars, represents around 1,020 million dollars per year. This gap is covered primarily by issuing more equity and, when necessary, selling Bitcoin. Therefore, the signal that truly matters for your coupon is not so much the price of BTC, but rather Strategy's ability to continue issuing paper at a good price: the day the market stops buying its new cheap issuances, the machine will seize up.

And the other Strategy preferreds: STRK, STRF, and STRD?

STRC was not born alone. It is part of a family of preferred shares with which Strategy finances its Bitcoin purchases, and the names are almost a play on words: STRK (Strike), STRF (Strife), STRC (Stretch), and STRD (Stride). They all share the same idea —capturing money from income-seeking investors and converting it into BTC— but the deal each offers is different. The table puts them side by side:

All four share a reference value of $100, although they went on sale at a discount (between $80 and $90 depending on the series). The practical consequence for the investor is clear: it is not enough to know that something is "a Strategy preferred"; you have to look at which one, because each letter hides a very different deal —from the convertible STRK to the non-cumulative STRD. If someone tells you about "Saylor's dividend" without specifying the ticker, they aren't telling you much.

How much are you actually being paid for the risk?

11.50% sounds massive, but a coupon only means something compared to the safe alternative. With the 10-year U.S. Treasury bond around 4.47% on June 12, 2026, STRC offers about 7 extra percentage points (700 basis points) above what the risk-free asset pays. That differential —the spread— is what you are actually buying: the premium for assuming the risk of a company whose primary asset is something as volatile as Bitcoin.

Is that spread generous? 700 basis points over Treasuries is high-risk debt territory (what is known as high yield). In other words: the market itself does not price STRC as a safe asset, but as speculative credit. That is the most honest clue as to what it is: the instrument promises price stability, but its premium screams "high risk." Both signals coexist, and understanding them is the difference between buying with your eyes open or believing that 12% is free money.

Let’s put it into numbers. If you place $10,000 in STRC at 12%, you would collect about $1,200 a year in dividends. However, your investment does not grow: as long as the price remains pegged to the pair, your $10,000 will remain $10,000. If Bitcoin were to double in that same year, a BTC owner would go from $10,000 to $20,000; you would still have your $10,000 and your coupon. Therein lies, in a single calculation, the difference between owning and lending: you trade the upside potential for a fixed and predictable income —as long as Strategy can pay it—.

And here is a trick to judge whether that 11,50% is high or low: flip the question around. What interest rate would you demand to lend money, without collateral, to a company whose only major asset is Bitcoin? If your personal answer is higher than 12%, you are being paid too little for the risk you perceive. If it is lower, it looks attractive to you. The yield on a credit is never an objective number: it is the comparison between what is offered and what you would demand for taking on that risk.

Where is the catch? The "wrong-way" risk

The same thermostat that stabilizes the price hides a problem for the issuer of the stock. Look at the step-up: the coupon rises when STRC falls below $95. And when does it usually fall? Exactly when the market doubts Strategy, which tends to coincide with Bitcoin drops. In other words, the company's cost skyrockets exactly at its worst moment. This is called wrong-way risk: what calms the holder tightens the issuer's neck.

The arithmetic makes it clear. There are around $8.5 billion in STRC in circulation. On that basis, every extra percentage point of the coupon represents about $85 million annually in additional burden —money that can only come from issuing more capital or selling Bitcoin—. And it is not theoretical: Strategy already had to sell Bitcoin to cover the preferred dividend payment, precisely what a "BTC-backed" product should not need to do. In July 2026, it repeated this at scale —3,588 BTC sold for $216 million—, as we covered in the Strategy trilemma.

The underlying danger is reflexivity, the same loop that sank other projects: if BTC goes down, Strategy's valuation goes down, issuing capital becomes more expensive, it buys less BTC, the narrative weakens, and pressure increases. We saw this in the collapse of Terra/Luna. The big difference in Strategy's favor is that it holds real bitcoins, not an algorithmic dollar: it has a floor that Terra did not have. But the channel through which panic is transmitted —trust in a single issuer— is of the same family.

STRC or just buying Bitcoin?

They are not the same thing nor do they serve the same purpose. The table summarizes which one fits best depending on what you are looking for:

There is a nuance that is almost never mentioned: STRC does not diversify against a Bitcoin crash. Both ultimately depend on the price of BTC —one directly, the other through the health of the company that accumulates it. Anyone holding BTC and STRC thinking they are spreading their bets is actually doubling their exposure to the same variable, just with two different ways of getting paid. In the worst-case scenario, both risks ignite at the same time.

How should you think about STRC?

Recapping the essentials: STRC is a preferred stock that behaves like a high-risk bond. It pays you a high coupon, stays near $100 thanks to a mechanism that adjusts that coupon, and in exchange, you become a creditor of Strategy —not an owner of Bitcoin. The appreciation of BTC is not yours; the risk that Strategy cannot pay is.

It is worth closing with two corrections to figures that are circulating inflated. The real size of STRC is around $8.5 billion; the figures of over $10 billion sometimes cited correspond to all Strategy preferreds combined (STRC plus STRK, STRF, and STRD). And, regarding the backdrop: the Bitcoin drop in June was real but modest, around 12% in about ten days from the June 1 peak (from about $72,000 to about $63,450 on June 12), not the dramatic collapse suggested by some headlines. To place that full macro picture, there is the CPI and FOMC setup for June 2026.

Who does it make sense for, then? For someone who wants a high and relatively predictable income and accepts in exchange the credit risk of a company whose fate is tied to Bitcoin. Not for someone who fundamentally seeks exposure to Bitcoin's upside: for that, the consistent and cheaper option is to buy Bitcoin directly.

The takeaway is simple: the STRC coupon is not a gift, it is the price of a risk. When that coupon rises, you aren't earning more for nothing; the market is warning you that the risk has increased. Understanding STRC is, above all, not confusing that premium with insurance.

Sources and links: Bitcoin Magazine Pro — STRC explained · VALR — STRC variable-rate perpetual preferred · CryptoTimes — semi-monthly dividends vote · CNBC — CPI May 2026 · bitbo.io — Strategy treasuries