Peter Schiff warns Strategy’s Bitcoin bet faces strain

Peter Schiff has renewed criticism of Strategy’s Bitcoin strategy after the company made another large purchase of the cryptocurrency.

Schiff argued that the financial logic behind Strategy’s long-running Bitcoin accumulation plan has weakened under current market conditions.

His latest comments focused on share issuance, debt costs, preferred stock pressure, and the possible dilution of Bitcoin exposure for MSTR shareholders.

Schiff said Strategy previously benefited when its shares traded at a premium to the value of its Bitcoin holdings.

That premium allowed the company to raise capital through stock sales while still increasing Bitcoin exposure per share for existing investors.

He argued that the model worked when MSTR traded above its net asset value because new share sales could add more Bitcoin than the ownership being issued.

Schiff said the situation has now changed because Strategy is no longer raising capital under the same favourable conditions.

"Past sales were done at a premium. Current sales are done at a discount,"

Schiff said.

Schiff argued that discounted share issuance creates a different outcome because the company may sell more ownership than the Bitcoin it adds to the balance sheet.

Strategy said in early June that it bought 1,550 Bitcoin for $101 million, continuing its corporate policy of expanding its Bitcoin reserves.

Bitcoin supporters welcomed the latest purchase as another sign of commitment from Strategy and its executive chairman, Michael Saylor.

Schiff took the opposite view and claimed the transaction was unfavourable for shareholders because it reduced Bitcoin per share rather than increasing it.

He described the purchase as a case of “negative Bitcoin yield” because he believes the added Bitcoin did not offset the ownership dilution.

Schiff also said the position quickly moved against Strategy after Bitcoin prices pulled back following the purchase.

He claimed the company was already down more than $6 million on the newly acquired Bitcoin.

Schiff also linked the latest purchase to wider concerns about Strategy’s financing structure and the pressure surrounding its preferred stock vehicle, STRC.

He said weaker confidence in STRC could force Strategy to raise its dividend if the security fails to return to par value.

A higher dividend could increase financing costs at a time when the company remains committed to buying more Bitcoin.

Schiff argued that Strategy should consider a different capital allocation approach while its stock trades at a discount.

"Sell Bitcoin and buy back discounted stock,"

Schiff noted.

His argument directly challenges Strategy’s main treasury policy, which has centred on long-term Bitcoin accumulation under Saylor’s leadership.

Schiff also warned that MSTR may not be the best vehicle for investors who want exposure to Bitcoin.

He said owning MSTR remains the “worst way” to make a bullish Bitcoin bet because shareholders face company-specific financing and dilution risks.

Schiff cited a poll response from Bitcoin supporters to question whether MSTR investors were properly weighing those risks.

"That’s not rational. That’s a cult,"

Schiff highlighted.

The debate now centres on whether Strategy’s continued Bitcoin purchases still benefit shareholders as financing conditions become more difficult.

At the time of reporting, Bitcoin price was $66,359.50.