The Question: What Percentage of MSTR Bitcoin Do Shareholders Own?

Strategy (MSTR) holds approximately 180,000 Bitcoin. A headline question investors ask: "If I own Strategy stock, how much Bitcoin exposure do I have?"

The naive answer: "180,000 BTC divided by shares outstanding = Bitcoin Per Share (BPS)."

The accurate answer: "Less than that, because preferred equity, convertible notes, and warrants have senior claims."

Strategy's capital structure includes five series of preferred equity with liquidation preferences ahead of common. These senior securities don't own Bitcoin directly, but they have rights to a portion of it in a liquidation event. The dollar value of these rights creates "drag" -- a reduction in how much Bitcoin common shareholders actually own.

The CEBE Analysis Framework

CEBE (Common Equity Bitcoin Exposure) is an analytical framework that measures what common shareholders actually own after accounting for senior claims.

Here's the core formula:

Let's break down each component:

• Total Bitcoin Holdings: The headline BTC balance from SEC filings (10-K, 10-Q, 8-K). For Strategy, this is ~180,000 BTC.
• Senior Claims Value: The total dollar value of convertible notes, preferred equity liquidation preferences, and warrant exercise values. This is sourced from indentures and footnotes.
• Bitcoin Price: Current market price. Drag is price-dependent because it's calculated as a percentage of total BTC at current prices.
• Drag%: Senior claims ÷ (total BTC × price). This percentage represents the portion of Bitcoin claimed by senior securities.
• CEBE: The remainder: Total BTC × (1 - Drag%). This is the Bitcoin exposure available to common shareholders.

Real Example: Analyzing Strategy (MSTR)

In this scenario, despite holding 180,000 BTC, common shareholders have CEBE of only 135,000 BTC. The difference of 45,000 BTC (25.4% drag) represents the Bitcoin value available to senior security holders.

This is drag compression in action. The senior claims didn't change ($3.2B in total dollar value), but Bitcoin price appreciated 43%. Because senior claims are fixed-dollar obligations, they now represent a smaller percentage of total Bitcoin holdings. CEBE improved from 135,000 to 147,600 BTC even though Bitcoin holdings stayed at 180,000.

This is why drag compression matters for long-term investors. As Bitcoin appreciates, the fixed-dollar weight of senior claims shrinks relative to total holdings, benefiting common shareholders.

Understanding the Components of Drag

Drag is not monolithic. It comes from three sources:

1. Preferred Equity Liquidation Preferences

Strategy has issued five series of preferred stock. Each series has a liquidation preference -- a claim on company assets before common shareholders see anything. For example, STRF (10% fixed cumulative preferred) has a claim equal to its stated liquidation value plus accrued dividends.

In a liquidation, holders of STRF would receive their full preference before STRC holders receive anything. And both would receive their shares before common shareholders. The dollar value of these preferences, converted to BTC at current prices, creates drag.

2. Convertible Notes

Companies like Strategy and Metaplanet have issued convertible debt. These notes are fixed-dollar obligations but can convert into stock at predetermined conversion prices. If converted, they become additional common equity dilution. The conversion mechanics matter: an out-of-the-money convertible (stock price below conversion price) creates more drag than an in-the-money convertible.

3. Warrants

Warrants are call options to purchase common stock at a fixed exercise price. When exercised, they dilute existing common shareholders. The economic value of warrants (calculated using models like Black-Scholes) contributes to total senior claims drag.

Modeling Multiple Bitcoin Price Scenarios

The interactive modeler on CEBE Tracker lets you build custom scenarios. Here's why multi-scenario analysis is essential:

• Bull Case ($150K Bitcoin): Model how drag compresses and what CEBE looks like at higher prices. Senior claims shrink as a percentage; common shareholders win.
• Bear Case ($30K Bitcoin): Drag expands. Senior claims now represent a much larger percentage of total holdings. The risk of preferred holders dominating asset allocation increases.
• Current Case: Where are we today? What's the current CEBE, and how much drag compression potential remains?
• With New Issuance: What happens if the company issues new preferred equity or convertible notes? Drag increases immediately. Model the impact.

The modeler accounts for all of this, allowing you to build specific assumptions around Bitcoin appreciation, preferred dividend rates, and capital structure changes.

Capital Structure Risk

Not all drag is created equal. The seniority hierarchy and terms of preferred equity matter enormously.

Strategy's STRF is most senior and fixed-rate cumulative. This means:

• Fixed rate: 10% per year, no variation based on market conditions
• Cumulative: Unpaid dividends accumulate and must be paid before junior classes
• Most senior: Paid first in any liquidation

Strategy's STRD is most junior and non-cumulative. This means:

• Fixed rate: 10% per year
• Non-cumulative: If dividends aren't paid, they're lost forever
• Most junior: Paid last among preferred classes, after STRF, STRC, STRE, STRK

In a stress scenario where the company can't meet all dividend obligations, STRF holders are protected (cumulative), but STRD holders lose unpaid dividends. This creates different risk profiles for different preferred classes and affects how you should think about drag.

Deep Dive Resources

Ready to master Bitcoin treasury analysis? Explore these resources:

• The CEBE Framework Explained -- Complete breakdown of how CEBE is calculated and why it matters
• Bitcoin Treasury Company Comparison -- See how Strategy, Metaplanet, Strive, and others stack up
• Interactive Modeler -- Build custom drag and Bitcoin appreciation scenarios for any company
• Company Pages -- Drill into live data for specific Bitcoin treasury companies
• How-To Guides -- Learn how to read every column in the tracker dashboard