Perpetual preferred stock lowers Bitcoin leverage risk
The guest argued that issuing variable-rate perpetual preferred stock is the second-best, low-risk method to acquire Bitcoin with leverage because it avoids credit liquidation risks.
The argument
The speaker explained that unlike conventional margin loans or credit instruments, perpetual preferred stock has no redemption rights or collateral calls. If Bitcoin's value drops significantly, it does not trigger an insolvency event because the board can simply suspend the dividend, converting short-term liquidation risk into a manageable multi-decade equity risk.
The thesis, stress-tested
✓ What validates it
- ✓Successful issuance of perpetual preferred stock by MicroStrategy at favorable dividend rates
- ✓Continued premium of MSTR equity relative to its net asset value (NAV)
▸ Risks discussed
- ▸If Bitcoin's price appreciation stagnates at 0% for decades, the equity investors will fail to generate returns to cover the dividend costs
Hear it yourself
"It's like like the issuer has the money for about 20 years right not if you were to borrow money from from a crypto exchange you have the money for 20 minutes right and if you were to borrow the money in a conventional margin loan you have the money for 20 hours to to two or three days but so I mean Bitcoin could fall 95% it doesn't…"
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