Digital Credit Explained: Understanding Bitcoin Preferred Stock

Short answer: Digital credit means preferred stock issued by companies that hold bitcoin. You receive a regular dividend, today between 8.6% and 15.5% a year, and the company buys bitcoin with your money. The bitcoin on its balance sheet are the security behind the dividend, but not collateral. You hold a claim on the company, not the coins.

You hold bitcoin, and at some point you want to live off it without selling. That is exactly what bitcoin companies have been offering a new product for since 2025: digital credit. It promises you a regular income in dollars, euros or pounds, backed by bitcoin. Here you learn how these securities are built, how to check their safety and what can go wrong.

What is digital credit?

Digital credit is the umbrella term for securities that a company holding bitcoin issues to raise money and on which it pays a regular distribution. Strategy (formerly MicroStrategy) coined the term for its preferred stock. Strive, Metaplanet, The Smarter Web Company and the Swedish BTC AB now issue such securities too.

Almost all of these securities are preferred stock. A preferred stock sits between debt and ordinary shares:

• It gives you no vote and no share in the company's price gains.
• In return, you get a fixed or variable dividend, calculated on a fixed amount, the stated amount.
• And you are paid before common shareholders: as long as your dividend is outstanding, they get nothing.

Payment goes in this order: debt, preferred stock by rank, and common stock last. What that looks like for each issuer is shown in the capital structure by issuer.

Why bitcoin companies issue preferred stock

A company that wants to buy bitcoin needs money. It has three options: sell new common shares, take on debt or issue preferred stock.

New common shares only pay off if the stock is worth more on the market than the bitcoin behind it. This ratio is called mNAV. On Nov 12, 2026, it was 0.80× for Strategy: new common shares would have reduced bitcoin per share.

Preferred stock solves this problem. It doesn't dilute bitcoin per common share; it only costs the dividend. As long as bitcoin rises more over the long term than the dividend costs, common shareholders win. If bitcoin falls for a long time, the dividend becomes a burden.

How big the market has become: in the twelve months to Nov 8, 2026, Strategy bought ₿102’531 with money from preferred stock, according to its SEC filings. All nine traded securities together have a stated amount of about €13.9 billion (as of Nov 12, 2026).

The building blocks of a bitcoin preferred stock

Every digital credit security can be described with the same eight features.

All terms explained in one sentence each are in the glossary on the Digital Credit page.

Digital credit on the market: all traded securities

These nine bitcoin preferred stocks are traded on an exchange today. They are sorted by BTC coverage, from the safest to the most weakly covered.

As of Nov 12, 2026; closing prices from Yahoo Finance, holdings and claims per issuers and SEC filings, BTC price €64’479. Live figures are in the Digital Credit overview.

SATA and SATS are backed by the same Strive bitcoin, but at different positions; what that means for rate and coverage is shown in Strive SATA and SATS explained.

There are also two securities from Metaplanet: MERCURY (4.9% fixed, convertible) was issued to institutional investors and is not listed; MARS (variable) has been announced but not yet issued. What both are meant to be and which deadline applies to MERCURY in January 2027 is shown in Metaplanet MARS and MERCURY.

For investors in the euro area, STRE is special: it is denominated in euros and traded in Luxembourg, so you carry no dollar risk. On the other hand it hardly trades; according to Yahoo Finance, not a single share changed hands on Nov 12, 2026.

Understanding yield: dividend rate and effective yield

The dividend rate always refers to the stated amount. What you actually earn depends on what you pay on the market. That is the effective yield.

STRD has a 10% rate on $100, so it pays $10 a year. If you buy it at $67.50, you get those $10 on your $67.50: 14.8% a year. If you buy STRF at $101.81, the same rate gives you only 9.8%.

A price far below the stated amount is not a gift: the market sees more risk. STRD is non-cumulative and ranks last.

Fixed or variable: what is the difference?

A fixed rate always stays the same. If interest rates rise or confidence falls, the price drops instead, until the effective yield is attractive again. That is why STRK and STRD are trading at about two thirds of their stated amount today.

A variable rate is reset by the issuer every month so that the price stays close to the stated amount. That usually works, but not always: STRC fell to $74.57 in June 2026. Strategy raised the rate to 12% in July, and by the end of September the price was back at $99.35. How these mechanics work in detail is explained in the article STRC (Stretch) explained.

How safe is digital credit? BTC coverage and BTC price at 1×

There is no collateral behind digital credit. No bitcoin is reserved for you. The safety comes from the company owning bitcoin and from you ranking ahead of common shareholders.

How much this safety is worth is measured by BTC coverage: how many times could the company's bitcoin pay all claims ranking ahead of and equal to your security, including your security?

From that follows the BTC price at 1×: the bitcoin price at which the company's bitcoin just about cover all these claims. If bitcoin falls below it, your repayment depends on the company's other resources.

Coverage next to the Power Law floor

The BTC price at 1× can be put in context with the floor from the Power Law model: the line bitcoin has hardly ever fallen below in its history.

On Nov 12, 2026, the floor is at €60’566 (CHF 55’915). All nine securities would still have more than 1× coverage even there. The most weakly covered security, SATS, would come to about 1.37× at the floor; STRC to about 3.5×.

This is a model, not a guarantee: bitcoin can fall below the floor too, and coverage changes every week when a company issues new securities or buys bitcoin. How floor and trend are calculated is in the methodology. All securities side by side by yield and coverage are shown in the chart Yield vs. coverage. How to read effective yield, coverage and buffer together, and what a 50% bitcoin decline does to each security, is shown in Effective yield, BTC coverage and BTC price at 1× explained.

Worked example: €10’000 or CHF 10’000 in digital credit

What does digital credit actually deliver? Three securities with very different profiles, each bought with €10’000:

The examples show the basic pattern: more yield costs coverage. If you want 5.7 percentage points more than with STRF, you accept coverage that is a good five times lower.

How much monthly cash flow your own amount produces can be worked out in the digital credit calculator. It also shows what happens if you sell part of your bitcoin for it:

Six risks you should know before buying

High coverage protects against the worst, but not against losses. You should know these six risks before you buy digital credit. All ten risks, with the figures from June 2026, Strategy's bitcoin sales and a checklist, are shown in The risks of bitcoin preferred stock.

1. Price risk

Digital credit fluctuates, even if less than bitcoin. STRC fell about 25% below its stated amount in June 2026, and on Nov 12, 2026, STRK and STRD are about a third below theirs. Anyone who has to sell in such a phase takes a loss. Prices since issue are shown in the history per security.

2. Dividends can fall or be missed

The issuer can lower variable rates. It can suspend any dividend. With cumulative securities it is paid later; with non-cumulative ones such as STRD it is lost.

3. Dependence on the capital markets

The companies mostly don't earn their dividends from ongoing business but pay them from new money raised on the capital markets. If that money dries up, for example because the common stock falls below the value of its bitcoin, they have to sell bitcoin or suspend the dividend.

4. Currency

Most securities pay in US dollars, MORE in pounds, BTC-PREF-A in kronor. For you in Germany, Austria or Switzerland, dividend and price fluctuate with the exchange rate. Only STRE is denominated in euros.

5. Trading and access

STRC trades in the millions every day, STRE and MORE hardly at all. With little trading, you pay more when buying and get less when selling. Not every broker offers US preferred stock.

6. Taxes

Some US issuers declare their distributions as return of capital, which in the US initially doesn't count as income. This classification does not automatically apply in Germany, Austria or Switzerland. How to tax the dividend in your country, with worked examples, is shown in Paying tax on digital credit dividends.

How to check a digital credit security in five steps

Before you buy, answer these five questions. The figures for them are on the Digital Credit page.

1. How high is the BTC coverage? Below 2×, the buffer is small in a typical bear market of 50 to 80%.
2. Where is the BTC price at 1× compared with the floor? The further below, the more room.
3. Is the security cumulative? If not, missed dividends are lost.
4. Fixed or variable rate? Fixed means predictable income, but a more volatile price.
5. What currency does it pay in, and how much does it trade? Both decide what ends up reaching you in euros or francs.

The next payment dates of all securities are shown in the dividend calendar.

Who is digital credit right for?

Digital credit can suit you if you hold bitcoin for the long term, need a regular income and don't want to sell for it. For example, if you want to cover part of your spending in retirement. How much capital you need for a certain amount per month is worked out with three sample portfolios in Monthly cash flow with digital credit. How such a plan comes about is shown in the article Setting your bitcoin goal, and the academy goes deeper under Plan and live.

Digital credit doesn't suit you if you need your money back safely on a fixed date or can't stomach price losses of 25%. How it compares on yield, volatility and safety with fixed deposits, bonds and dividend stocks is shown in Digital credit vs. bonds, fixed deposits and dividend stocks.

How well an issuer itself is doing, with bitcoin holdings, debt and mNAV, is shown in the treasury profiles, for example of Strategy and Strive.