What is digital credit? I explain how Bitcoin treasury companies use preferred equity like STRC, SATA, and MARS to raise capital and buy more Bitcoin.
When I first started analyzing Bitcoin treasury companies, most of the focus was on equity issuance and debt.
But more recently, I’ve been paying attention to a newer layer in the capital stack. What I think of as digital credit.
In my view, this is where things start to get interesting.
What Is “Digital Credit”?
When I use the term digital credit, I’m referring to income-generating securities backed by companies that hold Bitcoin on their balance sheet.
These are typically issued as preferred equity rather than common stock.
They sit somewhere between debt and equity.
Why This Matters
Bitcoin treasury companies are constantly looking for ways to raise capital.
But issuing common shares creates dilution, and taking on too much debt increases risk.
Digital credit offers a middle ground.
The Simple Idea
At its core, digital credit works like this:
Investors provide capital
In return, they receive a security that pays a dividend yield
The company uses that capital to buy Bitcoin
It’s a way of turning investor demand for income into Bitcoin accumulation.
Real-World Examples
We’re starting to see this structure emerge across multiple players in the space.
Strategy → STRC
Strive Asset Management → SATA
Metaplanet → MARS (under planning)
Each has its own structure, but the core idea is similar.
What Is Preferred Equity?
Before going deeper, it helps to understand preferred equity.
Preferred shares are different from common shares.
Key Characteristics
Preferred equity typically offers:
Fixed or targeted yield (dividends)
Higher liquidation priority than common equity
Limited or no voting rights
It’s designed for investors who want income with some downside protection.
How Digital Credit Fits In
In the context of Bitcoin treasury companies, preferred equity becomes a funding tool.
Instead of raising capital through common shares, companies issue preferred securities.
This allows them to tap into a different type of investor which is really the fixed-income market (approximately $300 trillion dollars). Let the magnitude sink in.
Source: X.com@Croesus_BTC
The Mechanics (Step-by-Step)
Here’s how I break down the process:
Company issues preferred equity (digital credit)
Investors subscribe to the offering
Company receives cash proceeds
Cash is used to acquire Bitcoin
Company pays yield to preferred holders
That’s the full loop.
Where the Yield Comes From
This is one of the most important questions and often the most common question asked.
How can a company holding Bitcoin generate yield?
This question is often compared to buying Gold, which on it's own doesn't directly generate yield.
In My Analysis, It Comes From:
The company's operating cash flows from its business (if any)
Capital market activity such as raising funds from equity markets.
Derivatives trading strategies such as income generated from selling put options and covered call options. Which is what Metaplanet aims to do with its Bitcoin Income Generation Business Division.
Source: Metaplanet FY 2025 Earnings Presentation Page 12
Why Investors Buy Digital Credit
From an investor perspective, this structure is attractive for several reasons.
What They Get
Exposure to Bitcoin-backed balance sheets
Regular income (dividends)
Lower volatility than common equity
For many investors, this is easier than holding Bitcoin directly.
Why Companies Use Digital Credit
From the company’s perspective, this is a powerful financing tool.
Key Benefits
Raises capital without immediate common equity dilution
Expands investor base (income-focused investors)
Provides more flexible capital structure
In my view, this is about optimizing capital efficiency.
How It Differs From Debt
At first glance, digital credit looks similar to debt.
But there are key differences.
Debt vs Digital Credit
Debt:
Fixed repayment obligation
Maturity date
Higher risk in downturns
Preferred Equity (Digital Credit):
No fixed maturity (in many cases)
Dividends can sometimes be flexible
Lower balance sheet pressure
This makes it more adaptable.
How It Connects to Bitcoin Accumulation
This is where everything ties together.
Digital credit is not the end goal—it’s the fuel.
The Strategy Loop
Issue preferred equity
Raise capital
Buy Bitcoin
Strengthen balance sheet
Improve market positioning
This loop can repeat over time.
My Key Insight
In my analysis, digital credit allows Bitcoin treasury companies to:
Monetize investor demand for yield
Convert that demand into Bitcoin purchases
Scale their accumulation strategy
It’s essentially turning income investors into Bitcoin funding sources.
Example: How This Could Work in Practice
Let’s walk through a simplified scenario.
Company issues $100 million in preferred equity
Offers a 6% annual dividend
Uses proceeds to buy Bitcoin
Now:
Investors receive income
Company increases BTC holdings
Common shareholders benefit from BTC exposure
The Trade-Offs
Of course, this structure is not risk-free.
Risks I Pay Attention To
Dividend sustainability such as traditional finance metrics, dividend cover ratio
Over-reliance on capital markets
Bitcoin price volatility
Potential future dilution to pay for dividends
These factors can impact long-term outcomes.
Why This Is Emerging Now
I don’t think it’s a coincidence that digital credit is appearing now.
It reflects a maturing of the Bitcoin treasury model.
Companies are moving beyond simple equity raises.
The Evolution I’m Seeing
Phase 1:
Buy Bitcoin with cash
Phase 2:
Raise equity and debt
Phase 3:
Introduce structured instruments like digital credit
We are now entering Phase 3.
Why This Could Be a Big Deal
In my view, digital credit could significantly expand the capital available to these companies.
It opens the door to a much larger pool of investors.
Especially those who prioritize income over growth.
How I Analyze These Instruments
When I evaluate digital credit offerings, I focus on a few key things.
My Checklist
Yield vs risk profile
Company’s BTC accumulation strategy
Impact on BTC per share
Sustainability of dividends
This helps me assess whether the structure creates value.
The Role of Metaplanet’s MARS
Although Metaplanet’s MARS program hasn’t launched yet, it signals something important.
It shows that this model is spreading beyond the U.S.
And evolving into a global financing strategy.
Here are some basic details of the Metaplanet MARS preferred instrument.
Source: Metaplanet FY2025 Earnings Presentation Page 28
My Overall View
In my analysis, digital credit is a natural extension of the Bitcoin treasury playbook.
It allows companies to diversify funding sources.
And continue accumulating Bitcoin in a more sophisticated way.
Final Thoughts
When I first started, Bitcoin treasury strategies seemed straightforward.
Buy Bitcoin, raise capital, repeat.
But now, the capital is becoming more complex and, in a way, evolving to be more interesting.
Thank you for reading this insight and I hope you found it helpful.
Check the latest prices of Metaplanet quoted on different exchanges at the link below
Disclaimer:
This article reflects my personal research and opinions and is for informational purposes only. It is not financial advice. I may be wrong, and markets are inherently risky. Always do your own due diligence and consult a licensed financial advisor before making any investment decisions.
