Bitcoin, Bonds, and Grinding Silicon: How Strategy (MSTR) Is Reinventing Fixed Income Using AI
How Strategy is blending Bitcoin, AI, and innovative finance to build a new kind of fixed income empire
If you’ve been watching Strategy (formerly MicroStrategy), you know the company has become the biggest corporate HODLer of Bitcoin, with a treasury north of 600,000 BTC. But the company’s latest pivot is less about how much Bitcoin they hold—and more about how they’re engineering entirely new ways to finance it. Through a combination of fixed income innovation, AI experimentation, and Bitcoin conviction, Strategy is building something most of Wall Street can’t yet replicate.
Let’s break down what they’re doing, why it matters, and how AI is quietly powering this financial frontier.
A Brief History of Strategy’s Bitcoin-Powered Capital Structure
Strategy’s journey into Bitcoin began in 2020 with a bold decision to reallocate its corporate treasury. Since then, the company has raised capital through:
Selling common stock (dilutive but simple)
Issuing convertible bonds (debt that can turn into stock, often used by growth companies to access lower interest rates)
Borrowing against its Bitcoin (notably from Silvergate, a crypto-focused bank that later collapsed during the 2022 crypto cycle)
Each method had tradeoffs. Selling equity diluted shareholders. Convertible bonds attracted hedge funds who hedged their exposure by shorting the stock, reducing long-term alignment. And traditional loans came with banking risk—highlighted painfully by Silvergate’s demise.
Now, having learned from these experiences, Strategy is pushing forward with a new set of capital instruments that blend flexibility and yield.
The New Breed of Bitcoin-Backed Fixed Income
In January 2025, Strategy began issuing preferred securities. As of July 31, 2025, the company has launched four distinct offerings—each with a clever name and a specific role in constructing what is best described as a Bitcoin-backed yield curve (a chart that shows how yields vary across different durations and risk levels, commonly used in bond markets).
Strike (STRK) – A convertible preferred equity, which behaves like a bond but can convert into stock at certain conditions.
Strife (STRF) – A high-grade fixed income preferred, offering stability and lower risk.
Stride (STRD) – A junk bond-style preferred, with higher yield to compensate for higher risk.
Stretch (STRC) – The newest and most dynamic product, a variable-rate preferred stock designed to stay close to par (i.e., its original issuance price, often $100) while offering yield that "stretches" to meet market demand.
Stretch was initially offered at $500 million, but demand was so overwhelming that Strategy upsized the issuance to over $2.5 billion. Each security has its own at-the-market (ATM) facility, allowing the company to issue more units dynamically as investor appetite grows. This is incredibly savvy—Strategy is effectively constructing a flexible, multi-tiered fixed income product suite, all backed by Bitcoin.
Why This Strategy Might Be Unbeatable
Here’s the kicker: Strategy’s model creates a flywheel effect that others will struggle to match.
When they issue new preferreds or stock, they use the proceeds to buy more Bitcoin. As their BTC holdings grow, their treasury becomes even more attractive. That supports more issuance, more BTC purchases, and the cycle continues. Meanwhile, competitors looking to mimic this playbook are stuck in the less-favorable convertible bond market—where buyers are typically hedge funds playing a spread, not long-term believers.
And because Strategy now has a proven market for preferred securities, it can go straight to loyal investors with new offerings. Others can’t—yet.
The Role of AI: “Grinding the Silicon”
Chairman Michael Saylor has been vocal about how AI plays into all this. He describes the process of using AI tools—like ChatGPT—not to automate everything, but to amplify the middle of the creative process. He calls it grinding the silicon.
Here’s how it likely works (with some speculation):
A human analyst proposes a new structure—say, a hypothetical “Strong (STRG)” preferred that’s 10x over-collateralized and pays a 6% dividend.
The analyst brings the idea to a chatbot, assigning it roles like “you are a lawyer,” “you are a bond trader,” “you are a banker,” and interrogates the idea from every angle.
The AI helps identify weak spots, compares alternatives, and suggests improvements.
After iterating, the refined proposal is reviewed by human experts—legal, compliance, finance—before becoming a real security.
This is not end-to-end automation. It’s a new kind of financial R&D—using AI as a brainstorming and modeling partner before handing ideas over to seasoned professionals. It’s faster, more flexible, and way cheaper than hiring a full investment banking team to ideate product structures.
Financial Engineering Meets Narrative Engineering
What’s striking about Strategy’s current trajectory is the combination of technical execution and narrative control. The Bitcoin treasury draws attention. The securities market creates sustainability. The AI narrative brings intrigue and future-proofing.
They are not just a Bitcoin holding company anymore. They are a financial innovation firm building a vertically integrated stack: treasury, technology, product design, capital markets, and AI all rolled into one.
Final Thoughts
In a world where traditional yield is scarce and crypto remains volatile, Strategy is offering a hybrid: structured, Bitcoin-backed income products for a new class of institutional and retail investor. They’re not just grinding silicon—they’re grinding the financial machine itself and reshaping what capital markets can look like in a Bitcoin-native world.
Strategy’s use of AI to develop these products—applying it not “end to end” but “middle to middle”—mirrors how I approach business process enhancement: humans act as the idea generators and editors-in-chief. It’s a powerful example of why AI fluency and strong prompt engineering are becoming essential skills.
Disclosure: This article is for informational purposes only and should not be considered financial advice. Do your own research.