Peter Schiff Claims Strategy's Bitcoin Funding Machine Is Broken

Peter Schiff, a well-known crypto skeptic, recently claimed that Strategy (NASDAQ:MSTR) can no longer fund its Bitcoin (BTC) purchases at scale. Schiff highlighted that Strategy’s Stretch preferred stock, STRC (NASDAQ:STRC), has rebounded to approximately $99.40, nearing its $100 par value. He attributed this recovery to weekly buybacks and Bitcoin’s price surge from around $60,000 to above $80,000, which he believes instilled confidence or triggered short covering. However, Schiff argued that this rebound doesn’t address the core issue: Strategy can no longer sell more STRC to raise funds for further Bitcoin acquisitions.

According to a recent 8-K filing, Strategy acquired 334 Bitcoin between October 1 and October 4 at an average price of $85,839 per coin. The company funded this purchase by selling 92,894 MSTR shares for $15.7 million and using $13 million in cash. Notably, Strategy also spent $176.3 million to repurchase 1.77 million STRC shares between September 28 and October 4, exceeding its Bitcoin spending by over sixfold. Despite the reduced Bitcoin purchases compared to the previous week, Strategy maintained a substantial cash reserve of $4.88 billion in USD and an additional $833.4 million in cash, which Schiff noted helps cover STRC dividends.

Schiff warned that Bitcoin could experience a price decline if tech stocks pull back, potentially undermining Strategy’s financing structure. He also pointed out that while a larger cash reserve might extend the period during which STRC dividends are paid, it doesn’t resolve the inability to acquire more Bitcoin. The filing provides ammunition for both sides, with Strategy demonstrating its ability to buy Bitcoin but also revealing a significant focus on retiring STRC shares rather than expanding its Bitcoin holdings.