Depth Conversation with Jeff Walton: How MSTR's Financial Engineering Survives in Extreme Markets

Podcast Source: Bonnie Blockchain

Broadcast time: November 24, 2025

Guest: Jeff Walton (Founder of True North, Chief Risk Officer of Strive)

Organization: BitpushNews

Discussing the future of Bitcoin treasury companies, MicroStrategy's financial engineering, and why “only companies that hold BTC can survive”

1. The First Encounter at the Saylor Party

Bonnie:
Jeff, our real first meeting was at Michael Saylor's party. At that time, you and your wife were standing behind my mom and me in line for a photo, do you remember?

Jeff:
Of course I remember, that day was truly a special occasion. I also met David Lynn at that party, and later we organized two meetings together. Almost everyone who attends such gatherings is promoting the Bitcoin ecosystem in their own way, which feels very inspiring.

Bonnie:
And you said that you had already decided to quit your job before going to the party?

Jeff:
That's right. I had already decided to leave the reinsurance industry after 11 years and was preparing to dedicate myself full-time to Bitcoin. This party was a “rite of passage” for me, confirming the direction I wanted to take.

2. Jumping from the Reinsurance Industry into the Bitcoin World

Bonnie:
Can you talk about why you left the reinsurance industry?

Jeff：
I work as a reinsurance broker, mainly analyzing the balance sheets of insurance companies and selling risks to global capital providers. This industry is tough, the pace entirely depends on the macro environment, and the growth potential is limited. The most crucial thing is that I see a very fundamental problem: insurance companies have no way to use Bitcoin as a hedging tool for long-term liabilities.

For example, a workers' compensation medical payout may last up to 10 years, and if the medical cost estimate deviates by 0.25%, the entire business model could face serious issues. However, the assets held by insurance companies cannot receive any credit rating in Bitcoin and cannot use BTC to cope with long-term inflation and cost uncertainties.

When I brought up Bitcoin, almost everyone in the industry laughed at me. But what I see is clearly a huge structural opportunity.

So I left and wanted to fully dedicate myself to Bitcoin, and fortunately joined Strive, specifically responsible for Bitcoin Strategy.

3. The Core of the MicroStrategy Model: Why Permanent Preferred Stock is Important

Bonnie:
You have a deep understanding of what MicroStrategy is really doing. Why has Saylor switched from convertible bonds to “perpetual preferred stock” by 2025?

Jeff:
Because perpetual preferred shares solve the biggest flaw of convertible bonds: convertible bonds create structural short-selling pressure.

Many people think that convertible bonds mean “0% interest = free money”, but that's not the case. The interest is low, but the hidden cost behind it is a huge conversion premium. Moreover, the buyers of convertible bonds are not long-term investors, but rather the so-called “volatility addicts.” On the first day they obtain the convertible bonds, they will immediately short 70% of MSTR stock to hedge, so regardless of what MicroStrategy does, there will be a huge short pressure on the stock price in the market for a long time.

Bonnie： So the stock price of MSTR has been suppressed by these people?

Jeff：
You could say that. Moreover, they do not care about MSTR or BTC at all; they only care about arbitrage. Therefore, MSTR must change its financing model.

After switching to perpetual preferred shares, the role of the market is completely different. Buyers have become pension funds, insurance companies, and fixed income investors—these are not participants looking to create volatility, but rather to collect interest and hold assets.

More importantly, all the money raised was immediately used by MicroStrategy to buy Bitcoin. This causes its Bitcoin asset pool to continuously expand, while the preferred shares are “supported” by the Bitcoin assets through the seniority of the capital structure.

This is a very powerful structural innovation.

4. Why Jeff Treats MSTR as a “Forever Hold Asset”

Bonnie:
You also hold a lot of MSTR yourself, right? Why are you so confident in it?

Jeff：
Because the way I view MSTR is completely different from others. Most people focus on stock prices, while I focus on one indicator: Bitcoin Per Share (the amount of Bitcoin behind each share).

As long as this number continues to rise, the long-term value is bound to increase. MicroStrategy's model is to continuously raise funds, continually leverage, and constantly buy BTC, so its Bitcoin Per Share has been steadily increasing.

I see it as a “high beta version of Bitcoin,” which has historically performed three to four times better than Bitcoin over the long term. Therefore, I am willing to hold it for a lifetime.

I often say that I don't want the future to tell my grandson: “I sold MSTR at 400 dollars.” And it could be worth ten to twenty thousand dollars per share in the future.

5. Opportunities for STRK: A More Robust Exposure to Bitcoin

Bonnie:
What about STRK? Why do you think it has great potential?

Jeff：
The essence of the STR series is to encapsulate the value of Bitcoin within the shell of “traditional fixed income products,” offering interest rates higher than any fixed income products in the market while carrying lower risks than stocks.

More importantly, it is very suitable for institutional investors. Whether it is pension funds, insurance funds, or investors seeking stable returns, they cannot directly hold Bitcoin, but they can purchase products like STRK that have a clear structure, dividends, and priority repayment rights.

Personally, I prefer high volatility and high beta, so I lean more towards MSTR. However, from a market structure perspective, STRK is likely to see widespread adoption in the coming years.

6. Why “Bitcoin Vault Company” Will Become a Trend of the Era

Bonnie:
You said that Bitcoin Treasury Company will become an inevitable trend in the future. Why?

Jeff:
Because AI is destroying traditional businesses.

In the S&P 500, many companies have been doing just two things for decades: paying dividends and buying back stock. They have spent all their cash, and once the business is hit by AI, the stock prices plummet; these companies have no resistance—they have no assets at all.

But if you are a Bitcoin vault company, you have countless options:

You can collateralize Bitcoin for financing, issue bonds, issue preferred stock, sell covered calls, and even sell a bit of BTC to buy back stocks. You will never be “beaten to death” because you hold the strongest asset.

This is optionality. In the future, I believe that the S&P 500 will undergo a major reshuffle, and companies that do not hold Bitcoin will be eliminated.

7. True or False Bitcoin Believers? The Key is “Transparency” and “Self-Custody”

Bonnie:
Many people ask: how to determine if a company is a real Bitcoin company and whether the founder is a “true believer”?

Jeff:
I think the term “Bitcoin faith” is meaningless. Bitcoin belongs to everyone, and it is not a privilege of anyone's faith. What really matters is:

Is the company transparent? Did you really buy the funds as Bitcoin? Is the management trustworthy? Will they not misuse leverage? Will the money not be taken away?

Additionally, I have always emphasized: If you do not self-custody Bitcoin, you cannot have any real long-term confidence in any Bitcoin-related company.

First hold BTC, then understand these companies.

8. How to view cycles? MSTR should at least be viewed with a “four-year cycle”

Bonnie:
Many people complain about the large fluctuations in MSTR's stock price. What do you think?

Jeff:
If you approach any Bitcoin-related asset with a “quarterly report mindset,” you will not succeed.

The annualized return rate for Bitcoin in all four-year cycles is almost always positive; even if you buy at the highest point, it usually has an annualized return of 22% to 26% after four years.

Therefore, MSTR must also be viewed in a “four-year cycle.” If you can't hold it for four years, you don't understand its value at all.

Short-term ups and downs are completely meaningless.

9. How do ordinary people accumulate Bitcoin? Two paths

Bonnie:
What would you suggest for ordinary people to accumulate Bitcoin?

Jeff：
The first path is the most basic: directly buy Bitcoin and self-custody.

The second path is: using the leverage of Bitcoin treasury companies. For example, the high leveraged growth of MSTR, or the relatively stable returns of the STR series. The combination of both can even produce a better risk-reward ratio than holding BTC alone.

This is the classic modern portfolio theory.

10. Worst Case: When Will MSTR Have Issues?

Bonnie:
You hold so much MSTR yourself, what problems do you think it might encounter?

Jeff：
Very simple: there is only one situation - when Bitcoin itself has a problem.

For example, global electromagnetic pulse (EMP), total internet shutdown, civilization-level disasters. But if this happens, the issue with MicroStrategy is no longer the focus.

Even without considering Bitcoin itself, MSTR's current asset situation is extremely strong: The Bitcoin they hold can pay 120 years of preferred stock dividends, with leverage of about 10%, and assets exceeding 70 billion dollars. Even if Sailor leaves tomorrow, the company will not collapse.

11. Bitcoin Financial Engineering: Sucking Capital from Traditional Finance

Bonnie:
You often say “We are siphoning off capital from traditional finance.” How should this be understood?

Jeff：
The literal meaning is: to吸引资金 from the traditional financial system into the Bitcoin ecosystem through various financial engineering.

preferred stock, convertible bonds, bonds, leverage, options, capital structure layering…

These tools are essentially pipelines that bring massive capital from the fiat currency system into BTC. In the future, this process will become faster and faster.

This is an ongoing financial revolution.

Bonnie:

Today's conversation was amazing, thank you, Jeff.

Jeff:

Thank you for the invitation, and thanks to everyone who is witnessing all of this. We have only just begun.