Digital Credit

What it is

Digital credit describes a specific, small, and precisely bounded set of securities: perpetual preferred stock, listed on a public exchange, issued by companies that hold bitcoin as their principal treasury asset. As of 2026 the coverage universe is six instruments from two issuers — STRK, STRF, STRD, STRC and STRE from Strategy (Nasdaq: MSTR), and SATA from Strive (Nasdaq: ASST). The term is descriptive and editorial, not regulatory: no securities regulator recognizes a “digital credit” asset class, and no rating agency rates the category as such.

Structurally, each instrument converts a volatile, non-yielding balance-sheet asset into a security with a stated cash distribution and a defined position in the capital structure. The exposure to bitcoin is indirect and one-directional in an important sense: the holder does not participate in bitcoin appreciation beyond the stated distribution (with the single exception of STRK’s conversion feature), but the holder is exposed to bitcoin depreciation through the issuer’s capacity to keep paying. These are equity securities, not debt. Dividends are payable only when, as, and if declared by the issuer’s board out of legally available funds, and no series is collateralized by the issuer’s bitcoin. Strategy states plainly that its preferred securities “are not collateralized by the Company’s bitcoin holdings and only have a preferred claim on the residual assets of the company” (Strategy, STRC information); Strive makes the identical disclosure for SATA (Strive Bitcoin Treasury Dashboard).

Four price and rate concepts must be kept apart, and conflating them is the most common analytical error in this category. Stated amount (also called par or stated value) is $100 per share for every U.S.-listed instrument in the category and €100 for STRE; it is a design reference used to compute dividends and liquidation entitlements, not a market price and not a redemption promise. Liquidation preference is what a holder is entitled to receive in a liquidation and is not automatically equal to the stated amount — for STRC, STRD and SATA it adjusts daily to the greatest of the stated amount and specified recent market-price measures. Market price is what the security trades at in real time and can be above or below the stated amount for extended periods. Stated dividend rate is the fixed annual rate applied to the stated amount; current yield is annualized dividend dollars divided by market price and therefore rises as price falls. A security trading below its stated amount is not a realized loss for a holder who bought lower and continues to receive distributions, and a security trading above its stated amount does not entitle the holder to that premium in liquidation.

Rate mechanics differ sharply across the category and drive most of the behavioral differences. STRK, STRF, STRD and STRE carry fixed stated rates set at issuance. STRC and SATA are variable-rate instruments whose issuers reset the rate monthly within contractual limits, with the explicit objective of keeping the security trading near its $100 stated amount. Under both certificates, a downward adjustment in any period cannot exceed 25 basis points plus the decline in one-month term SOFR over the prior period, the new rate cannot fall below one-month term SOFR, and the issuer cannot cut the rate while accumulated dividends for prior completed periods remain unpaid (Strategy STRC prospectus supplement, 424(b)(5); Strive SATA prospectus supplement, 424(b)(5)). Strive has additionally stated a targeted SATA trading range of $99 to $101 and a policy of not issuing SATA through ATM or follow-on offerings below $100 (Strive 8-K coverage, StockTitan). The June 29, 2026 Digital Credit Capital Framework describes Strategy’s governance of preferred issuance, reserves, and dividend funding at the framework level (Strategy Digital Credit Capital Framework).

How it is calculated

Digital credit is a category rather than a metric, but five calculations recur across every instrument in it.

1. Annual dividend dollars

For a $100 stated amount at a 10.00% stated rate, D_annual = $10.00 per share, paid as $2.50 per quarter for the quarterly-pay series (STRF Investor Briefing, Strategy).

2. Current yield (the number that is not the stated rate)

Worked example, STRD: annual dividend is $10.00 on the $100 stated amount at the fixed 10.00% rate; at a market price of $72.67 the current yield is 13.76%. Worked example, STRC: the current stated rate is 12.00%, so annual dividend dollars are $12.00 per share, and at a market price of $97.52 the current yield is 12.31%. Worked example, SATA: stated rate 13.00%, market price $99.47, current yield 13.07%.

3. Premium or discount to stated amount

For SATA: ($99.47 − $100) ÷ $100 = −0.53%. This is a pricing observation, not a profit or loss. A holder’s economic result depends on entry price, distributions received, and exit price.

4. NAV coverage (years of dividend capacity)

Worked example, Strive: (25,000 × $75,868 + $83.7M) ÷ $55.6M = 35.6 years. Worked example, Strategy: (845,050 × $75,868 + $6.40B) ÷ $1.64B = 42.9 years. Coverage scales inversely with the bitcoin price: a 50% decline in bitcoin roughly halves the years-of-coverage figure, and the metric is issuer-defined and non-GAAP.

5. Arrears accrual on cumulative series

For STRF, each unpaid quarterly installment compounds separately at an annualized rate starting at 11% and rising 100 basis points per subsequent quarter to an 18% cap; a single unpaid $2.50 installment carried through eight quarterly compounding periods grows to roughly $3.32 under the filed 30/360 convention (STRF Investor Briefing, Strategy). STRE uses the same 11% start, 100 basis point step, 18% cap structure in euros (STRE Investor Briefing, Strategy). For SATA, unpaid dividends compound at the regular rate plus 25 basis points, increasing by 25 basis points for each month unpaid, capped at 20% per year (Strive Bitcoin Treasury Dashboard). STRD, being non-cumulative, has no arrears mechanism at all: an omitted dividend is gone permanently (STRD Investor Briefing, Strategy).

Why it matters

Risk comes before income in this category, and there are eight axes worth naming explicitly before any yield figure is quoted.

Dividend discretion. Every series pays only when, as, and if declared by the board. Declaration is discretionary, subject in some cases to narrow covenants such as STRK’s obligation to pay from the net proceeds of registered common-stock sales made in the 90 days before a record date (STRK Investor Briefing, Strategy). Cumulative accrual. STRK, STRF, STRC, STRE and SATA are cumulative; unpaid dividends accumulate and in most cases compound at penalty rates. STRD is non-cumulative and offers no such protection. Perpetuity. No series has a scheduled maturity, so there is no date on which the holder is contractually returned capital; the return of principal depends on selling in the secondary market or on an issuer redemption or fundamental-change repurchase. Subordination. All series rank junior to the issuer’s indebtedness and subsidiary liabilities, and the series rank against each other in a defined order. Redemption asymmetry. Issuers hold optional redemption rights under specified conditions — for STRC, redemption at $101 or higher plus arrears, with a partial call required to leave $250 million outstanding (STRC Investor Briefing, Strategy) — while holders generally have no put other than following a defined fundamental change. Issuer credit. Dividend capacity depends on bitcoin price, dollar reserves, and market access; Strategy sold 3,588 bitcoin in mid-2026 to fund digital credit dividends and replenish reserves (Strategy press release, July 6, 2026). Liquidity. Issue sizes range from roughly $1.3 billion of STRD to over $2.5 billion of STRC, and daily volumes are correspondingly uneven. Premium and discount. Most contractual exits reference the $100 stated amount or the liquidation preference, so buying materially above par means the protective features do not protect the full purchase price.

With those established, the reason an institutional allocator looks at the category at all is that it offers stated distributions in the 8.00% to 13.00% range against issuers whose asset base is bitcoin rather than receivables, inventory, or real property. The credit question is unusual: solvency is a function of an asset with no cash flow, high volatility, deep liquidity, and no counterparty. That combination produces a risk profile that does not map cleanly onto either corporate high yield or structured credit, which is precisely why the category needs its own vocabulary.

The comparison to holding bitcoin directly must distinguish custody model. Self-custodied bitcoin has no issuer, no board, no dividend discretion, and no credit risk; its risks are operational and personal. Digital credit substitutes a set of financial-institution risks for those: the issuer must remain solvent, its board must declare, its custodian must perform, and its access to capital markets must persist. Bitcoin held through a third-party custodian or an exchange-traded product sits between the two, adding custodian, counterparty and operational risk without adding the issuer-level dividend obligation. None of these is uniformly safer; they are different risk sets, and the choice depends on whether the holder is seeking price exposure or contractual cash flow.

Finally, a disclosure specific to this publication: True North Research is a wholly owned subsidiary of Strive, Inc., the issuer of SATA. Readers should treat coverage of SATA accordingly and consult the primary offering documents.

Key distinctions

• Digital credit is not credit. These are perpetual preferred equity securities. They rank junior to all of the issuer’s indebtedness, and their distributions are discretionary dividends rather than contractual interest.
• “Bitcoin-backed” is not a universal descriptor. No series in the category has a lien on the issuer’s bitcoin; both Strategy and Strive disclose that their preferred securities are not collateralized by bitcoin and hold only a preferred claim on residual assets (Strategy; Strive). The accurate phrasing is preferred equity whose issuer’s treasury is Bitcoin-denominated.
• “Par,” “stated amount,” and “liquidation preference” are not interchangeable. Stated amount is the fixed reference for dividend calculation; liquidation preference is what the holder is entitled to in a liquidation and can adjust daily; market price is what the security trades at. Read each term from the specific certificate.
• Stated rate is not current yield. The stated rate is the dividend rate on the $100 stated amount; current yield is annualized dividend dollars divided by the market price, so it moves inversely with price while the stated rate does not move at all for the fixed-rate series.
• A discount to par is not a realized loss. Par is a design reference for dividend calculation and liquidation entitlement. Economic outcome is determined by entry price, distributions received, and exit price.
• Cumulative does not mean payment is assured. Cumulative series accrue and compound unpaid dividends, which creates a claim that must be satisfied before junior distributions, but accrual does not compel payment on any date.
• Non-cumulative means permanently forgone. An omitted STRD dividend is not deferred, does not accrue interest, and is never owed in a later period (STRD Investor Briefing, Strategy).
• Digital credit is not crypto lending, DeFi yield, or stablecoin yield. The instruments are exchange-listed securities registered with the SEC and settled through conventional market infrastructure, not protocol-level or off-exchange lending arrangements.
• Variable rate does not mean floating spread. STRC and SATA rates are set at issuer discretion within contractual limits tied to one-month term SOFR, not by a mechanical index-plus-spread formula (STRC prospectus supplement; SATA prospectus supplement).
• Liquidation preference is not fixed at $100 for every series. For STRC, STRD and SATA the liquidation preference adjusts daily to the greatest of the stated amount and specified recent market-price measures, with a $100 floor and, for SATA before its first issuance sale, a $110 ceiling (SATA prospectus supplement).

Related terms

• mNAV
• Bitcoin Treasury Company
• Strategy Preferred Stack
• Digital Credit Markets and Instruments
• Digital Credit Dashboard

Issuer resources

• Strategy — Notes and Definitions — Strategy Inc.’s official methodology notes for mNAV, Net Bitcoin Per Share, and preferred-series terminology.
• Strive — Digital Credit / SATA — Strive Inc.’s product page for SATA, its Variable Rate Series A Perpetual Preferred Stock.

Sources

1. Prospectus Supplement, Variable Rate Series A Perpetual Stretch Preferred Stock (STRC), Form 424(b)(5) — MicroStrategy Incorporated d/b/a Strategy, via SEC EDGAR.
2. Prospectus Supplement, Variable Rate Series A Perpetual Preferred Stock (SATA), Form 424(b)(5) — Strive, Inc., via SEC EDGAR.
3. STRC Information — Strategy Inc.
4. Strive Bitcoin Treasury Dashboard — Strive, Inc.
5. STRF Investor Briefing — Strategy Inc.
6. STRD Investor Briefing — Strategy Inc.
7. STRK Investor Briefing — Strategy Inc.
8. STRC Investor Briefing, revised August 13, 2026 — Strategy Inc.
9. STRE Investor Briefing — Strategy Inc.
10. Strategy Sells 3,588 BTC to Fund Digital Credit Dividends — Strategy Inc., Form 8-K press release, July 6, 2026.
11. Digital Credit Capital Framework — Strategy Inc., June 29, 2026.
12. Strive raises SATA dividend and narrows targeted trading range, Form 8-K — Strive, Inc., via StockTitan.