Benchmark Defends Strategy's STRC Bitcoin Accumulation Model

Benchmark analyst Mark Palmer defended Strategy’s STRC preferred stock model against critiques framing it as a “circular” Ponzi scheme structure in a Wednesday report, arguing such characterizations “mischaracterize” how the company raises and deploys capital. According to Palmer’s analysis, STRC functions as part of a “deliberate and durable” model that “converts demand for yield into long-term bitcoin exposure,” with capital ultimately ending up on Strategy’s balance sheet rather than being recycled in a vacuum.

STRC Structure and Recent Fundraising

STRC is a variable-rate perpetual preferred stock that pays a roughly 11.5% annual dividend. It is designed to trade at or near $100, with the dividend rate adjusted to maintain that peg.

According to Strategy’s SEC 8-K filings, the company raised roughly $3.5 billion in the first three weeks of April, with more than 85% of that total coming from STRC preferred stock issuance. The proceeds were deployed in three consecutive weekly bitcoin purchases totaling 51,364 BTC, worth more than $3.9 billion at current prices.

Strategy’s STRC preferred price and dividend. Source: STRC.Live

Strategy bitcoin buys. Source: SaylorTracker

Strategy now holds 818,334 BTC worth roughly $62.5 billion and has returned to an unrealized profit of about $700 million after spending much of the past six months underwater.

Sustainability Arguments and Counterpoints

Benchmark argued that the STRC model is not dependent on continuous issuance to survive, noting that Strategy could cover preferred dividends by selling a portion of its bitcoin if needed. However, critics contend that any such move by the largest corporate bitcoin holder would likely be viewed as a major red flag, potentially triggering a broad sell-off.

In a separate note on Thursday, Grayscale’s Zach Pandl offered a contrasting view, characterizing instruments like STRC as ultimately a “directional bet” on bitcoin’s price, with payouts dependent on continued appreciation. Pandl compared their risk profile to high-yield corporate debt and stated that spot bitcoin ETFs remain the “cleanest” way for investors to gain exposure, aside from buying the asset outright.