Strategy Executive Chairman Michael Saylor posted on X on June 14, outlining the definitions, differences, and application logic of two per-share metrics for the Bitcoin treasury company—BPS (Bitcoin per share, before deducting preferred claims) and CEBE BPS (conservative Bitcoin risk exposure per share after deducting preferred claims)—and using whether the Bitcoin annualized return rate (BTC ARR) exceeds the cost of capital as the standard.
Confirmed Definitions of BPS and CEBE BPS: Saylor’s Original Quote
In his X post, Saylor clearly distinguishes the definitions of the two metrics:
BPS (Bitcoin per share): Saylor’s original text: “BPS measures the bitcoins per ordinary share before priority rights.” In the calculation, no preferred claims are deducted (debt, convertibles, preferred stock, etc.). Saylor positions it as a “common stock growth metric,” and BTC Yield (Bitcoin yield rate) is precisely tracked based on BPS.
CEBE BPS: Saylor’s original text: “CEBE BPS measures the bitcoins per ordinary share after priority rights. CEBE is a conservative risk metric.” In the calculation, all preferred claims are deducted, reflecting the number of bitcoins per share that ordinary shareholders would actually receive if the company were required to immediately use its bitcoin holdings to settle all debts.
Amplification Effect: Confirming the Mechanism Behind the Difference Between the Two Metrics
Saylor’s original text: “The difference between BPS and CEBE BPS is the amplification effect. In the absence of debt or preferred stock, BPS = CEBE BPS, and a bitcoin reserve company should track BTC like an ETF. As liabilities increase, BPS and CEBE begin to diverge, creating the potential to outperform BTC.”
Saylor also points out the bidirectionality of the amplification effect:
Long-term, low-cost debt: can turn the amplification effect into upside potential for common stock (Alpha)
Short-term, high-cost debt: can turn the amplification effect into risk and poor performance
Saylor’s original text: “Not all liabilities are equal. Short-term, high-cost liabilities may turn the amplification effect into risk and underperformance. Long-term, low-cost liabilities can turn the amplification effect into upside potential for ordinary equity.”
A One-Line Test and the Liability Maturity Structure
Saylor’s core test standard: “If the annualized return rate of Bitcoin (BTC ARR) exceeds the cost of capital, a well-capitalized bitcoin treasury company should be able to outperform BTC.”
Logic for applying liability maturity:
The shorter the liability maturity: CEBE BPS becomes more critical—if claims fall due today, CEBE BPS best reflects the actual remaining equity of common shareholders
The longer the liability maturity: BPS becomes more important—BTC’s long-term upside may be expected to cover accrued interest and dividends
Saylor notes that this framework also applies to evaluating Strategy’s own STRC preferred stock product (offering a high dividend yield): STRC is a type of liability that could generate an amplification effect, and the outcome depends on whether the above test standard holds.
FAQ
Under what circumstances do BPS and CEBE BPS have the same value?
Based on Saylor’s explanation, when a company has no debt or preferred stock, BPS = CEBE BPS; at that point, the company’s stock price should broadly track bitcoin, similar to a bitcoin ETF. Once the company starts taking on debt or issuing preferred stock, the two metrics begin to diverge, creating the amplification effect.
Is the “amplification effect” necessarily beneficial to common shareholders?
Under Saylor’s framework, the amplification effect itself is neutral—the direction depends on the nature of the liabilities: long-term, low-cost debt can turn the amplification effect into potential to outperform bitcoin; short-term, high-cost debt may cause the amplification effect to result in worse performance and increased risk. The core test is whether the BTC annualized return rate exceeds the company’s cost of capital.
How do you apply Saylor’s framework to evaluate Strategy’s STRC preferred stock product?
Under Saylor’s framework, STRC (high dividend yield preferred stock) is a type of liability that can generate an amplification effect. For common shareholders, whether STRC ultimately benefits or harms them depends on the core test: whether the annualized return rate of bitcoin (BTC ARR) exceeds STRC’s cost of capital (dividend yield).
