Retiring on 12% Bitcoin Income with Strategy Preferred Stock

Kern Bashir has spent 30 years managing portfolios, and he says the same problem keeps landing on his desk: clients who own growth assets they refuse to sell but who still need income to live on. Historically that was easy—bonds and dividend stocks did the work. In a world of low yields, he argues, those instruments have lost their pull, and there is 'really nothing else out there where you can get double-digit yields without taking on huge risk of loss of principal.'2:50

His answer is Strategy's preferred stock, STRC, which pays a 12% dividend with principal that stays roughly stable. He points out that the long-run average return of the US stock market is just over 10% a year, so a security paying 12% with little volatility 'is better than almost every single stock out there.' In his view, a portfolio of growth assets plus Bitcoin-backed income instruments is becoming the new 60/40—the classic allocation that served investors for decades but struggles to produce meaningful income when rates hover at low single digits.32:30

The case for STRC carries a scar. Strategy decided to take $1.35 billion from its cash reserve to buy back debt—a move that looked smart on paper but, in Bashir's telling, 'really freaked out' STRC shareholders who looked at that cash and saw their dividends for the next couple of years. The company has since reversed course, and he says it has put policies in place to ensure it never happens again.9:34

The repair has been substantial. The cash reserve has grown from less than $1 billion to roughly $5.1 billion earmarked as a reserve plus another $1.6 billion of general-purpose cash, and net debt now stands at only about $64 million once all reserves are counted. Bashir concedes the episode may not prove financially optimal in hindsight, but argues that shoring up confidence was worth it. STRC, he notes, has existed almost entirely in a Bitcoin bear market—its behavior in a genuine bull run remains untested.10:23

The arrival of Strive, with its SATA preferred paying 13% daily, gives income investors something they rarely had in preferred stock: a direct comparison. On Bashir's numbers, the gap in fundamentals is wide. Strategy's Bitcoin holdings are 39.4 times larger than Strive's, its total reserve at a $79,000 Bitcoin price is about $73 billion against Strive's just under $2 billion, and its dividend coverage runs 38 to 39 years against Strive's 17 to 18.14:27

Beyond income, Bashir floats a more speculative thesis drawn from Jason Lowry's work: Bitcoin may prove to be the best form of digital security ever invented. As billions of AI agents come online, he doubts software permissions can hold—AI can hack code—but proof-of-work cannot be faked. 'You can't fake proof of work, you have to do the work,' and that property could make Bitcoin the security layer for the internet itself.27:01

He points to early signals: late last December, Congress tasked the Pentagon with exploring whether Bitcoin could protect US computer systems, and a hearing reportedly confirmed the work was underway. If that direction matures, Strategy's Bitcoin pile—which Bashir describes as roughly 840,000 coins—would carry option value far beyond its monetary worth. He stresses the engineering pathway is unresolved and he is not an expert on it; it is a scenario, not a forecast.27:31

The honest obstacle, in Bashir's own framing, is time. STRC is barely a year old and SATA is younger still, and institutional money sits behind two gates: many investors refuse anything unseasoned for two or three years, and many more require an investment-grade credit rating before they can buy at all. Strategy is working toward a credit rating from S&P, which has asked it to prove its Bitcoin is a liquid asset and to hold extra cash.41:25

Behind those gates lie enormous pools of conservative capital—annuities, pension plans, government funds—that need familiar structures. Preferred stock itself is an old instrument, once the most common security in the railroad era, but a small and illiquid corner of today's market. If these new preferreds keep trading near par with reliable liquidity, Bashir expects more of that money to follow. Until then, the products must simply keep paying: SATA daily, STRC every two weeks, 'like getting a paycheck.'43:12