Peter Schiff, a prominent Bitcoin critic and gold advocate, expressed concern about MicroStrategy’s ongoing Bitcoin acquisition strategy.
The company continues to expand its holdings through a combination of bond and stock issuances.
Schiff said the current market conditions make MicroStrategy’s approach difficult to sustain. “The company is moving into more expensive capital,” he said, referring to recent financing changes related to preferred stock.
He added that previous financing methods, including issuing shares at higher valuations, are becoming less effective in the current environment.
MicroStrategy has recently relied more on preferred stock offerings with higher yield obligations. Schiff noted that the company currently issues products with yields of about 11.5%.
“These obligations cannot be covered by software revenue alone,” he said when explaining the company’s financial position. The company’s core software business has limited contribution to profits compared to its exposure to Bitcoin.
Schiff said funding future purchases could require issuing additional preferred stock, discounting the stock or selling Bitcoin. He argued that this could increase pressure on shareholders through dilution over time.
Structural risk claims and market reactions
Schiff explained that the company’s financing approach becomes vulnerable when market conditions deteriorate. He said this structure is highly dependent on continued access to capital markets.
Canadian billionaire Frank Giustra also commented on the strategy, calling it “a giant Ponzi that will unravel when the next financial crisis hits,” according to a statement quoted in the report. He suggested that macroeconomic stress could expose weaknesses in the model.
The comments reflect the ongoing debate over corporate finance strategies that rely on digital assets as primary reserves.
Additionally, market research group BitMEX Research offered a different take on MicroStrategy’s approach. The company said MicroStrategy is not under any forced liquidation pressure and remains financially flexible.
BitMEX Research stated that “no one is forcing MSTR to do this” and that the strategy is potentially beneficial in the current situation. The company noted that instead of selling assets, it could adjust financing terms, including coupon interest rates.
The debate continues as MicroStrategy maintains one of the largest corporate Bitcoin holdings while using structured financial instruments to support its accumulation strategy.
