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Peter Schiff has warned that Strategy, formerly known as MicroStrategy, could face increasing pressure from its latest funding approach tied to its Bitcoin treasury plan.
Schiff, a gold advocate and long-time Bitcoin critic, focused on Strategy’s use of high-yield preferred shares. He said the preferred shares carry an 11.5% yield, which he argued creates a significant cost as the company continues to raise funds linked to its Bitcoin buying strategy.
Schiff challenged a common argument from Strategy supporters that Bitcoin only needs to rise modestly to cover the preferred-share yield. He said the math changes as the company issues more instruments to fund additional Bitcoin purchases.
“The more STRC MSTR sells, the more BTC must rise to cover the yield,” Schiff wrote.
Schiff also argued that Strategy lacks normal corporate earnings that could easily fund preferred-share payouts. In his view, this could force the company to raise additional capital or sell Bitcoin.
He warned that a forced Bitcoin sale could add market pressure. Schiff said selling Bitcoin may lower the asset’s price and weaken Strategy’s balance sheet.
Schiff also suggested that weakness in the preferred shares could lead the company to offer higher yields, which would raise funding costs and increase strain on its capital structure.
“The only way to stop the death spiral is for MSTR to cancel the dividend,” Schiff said.
He added that such a move could hurt STRC, MSTR, and Bitcoin.
Michael Saylor has built Strategy into one of the largest corporate Bitcoin holders, using debt, equity sales, and other instruments to add BTC over several years. Schiff said that as of April 18, Strategy may not be able to rely as easily on selling common shares at a premium, and may instead need to sell more preferred shares, discounted common stock, or Bitcoin to meet obligations.
The warning adds to an ongoing debate over Strategy’s Bitcoin treasury model. Supporters view the approach as a long-term Bitcoin bet, while critics argue that rising funding costs could increase risk if Bitcoin prices weaken.
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