Key Highlights
- Peter Schiff questioned Strategy’s ability to issue additional STRC shares at current market prices.
- STRC was trading below $100 when Schiff made the comments on August 24.
- Schiff argued that without a higher dividend, raising additional capital through STRC could become more difficult.
Bitcoin critic Peter Schiff has questioned whether Strategy, formerly known as MicroStrategy, can continue using its STRC preferred shares to raise capital for Bitcoin purchases while the security trades below its $100 reference price.
In an August 24 post on X, Schiff pointed to STRC trading at around $95, despite the rise in Bitcoin and Strategy’s reported buybacks of the preferred shares. He argued that the lower market price could make it harder for Strategy to issue additional STRC on existing terms and said the company may need to increase the dividend to attract investors to new offerings.
He added that without a higher dividend, Strategy may not be able to use further STRC issuance to fund additional Bitcoin purchases.
Schiff’s comments focus on the relationship between STRC’s market price, its dividend, and Strategy’s financing costs. His post does not establish that Strategy is unable to raise capital through STRC or that the company plans to change its dividend.
What STRC means for Strategy
STRC is one of Strategy’s preferred-stock securities and is separate from the company’s common stock, MSTR. Strategy has used preferred-stock offerings alongside other financing methods, including convertible debt and at-the-market common-stock sales, as part of its broader capital strategy.
The structure allows the company to raise capital without issuing additional MSTR shares in every transaction. Investors in preferred securities receive fixed or variable dividend terms that differ from those of common shareholders, making STRC’s market price relevant to the economics of any future issuance.
If a preferred security trades below its reference price, issuing new shares on similar terms becomes less attractive to buyers unless the company adjusts the dividend or other terms to compensate.
Schiff also raises concern for MSTR holders
Schiff also questioned how Strategy’s preferred-share activity could affect common shareholders. He wrote, “In fact, he’ll likely keep destroying Bitcoin per common share to buy back more preferreds.”
The statement reflects Schiff’s interpretation of how capital directed toward preferred-share buybacks could affect the amount of Bitcoin attributable to each MSTR share.
The mechanics are more complicated than a simple comparison of Strategy’s total Bitcoin holdings. The company’s capital structure includes common equity, several classes of preferred securities, and debt, meaning changes in one part of the balance sheet can affect the relative economic position of different investor classes.
Whether a particular buyback increases or decreases Bitcoin exposure on a per-common-share basis depends on the price paid, the amount of capital involved, and the terms of the securities being repurchased.
What Strategy’s own data shows
A snapshot of Strategy’s public tracker, strategy.com (as of August 24 at 7:52 PM UTC) shows the company holding 840,447 BTC, with a Bitcoin reserve valued at roughly $73 billion.
MSTR shares were trading at $122.76, with the stock’s market-value-to-net-asset-value ratio (mNAV) sitting at almost exactly 1.00x. That means the stock was trading roughly in line with the value of its underlying Bitcoin holdings rather than at a premium or discount.
The same dashboard listed Strategy’s preferred-stock obligations at approximately $14.97 billion and total debt at roughly $6.75 billion, against a USD cash position of about $1.58 billion.
Those figures provide context for Schiff’s argument: with a large stock of preferred obligations relative to available cash, the price at which Strategy can issue or repurchase preferred shares like STRC has a direct bearing on its overall financing flexibility.
Schiff’s latest comments extend earlier criticism
Schiff’s comments continue a line of criticism he has made over the past several months.
In June, he argued that Strategy’s MSTR discount could widen toward 40% if the stock’s decline outpaced the value of its Bitcoin holdings. He separately warned that Strategy might eventually need to sell Bitcoin if MSTR kept falling to fund buybacks or dividend obligations.
In August, he argued that Saylor may still need to sell more Bitcoin to support STRC as preferred-share obligations grew.
The recurring theme in Schiff’s comments is Strategy’s financing mechanics, including dividend rates, buyback pricing and the interaction between preferred and common equity, rather than a direct forecast for Bitcoin’s price.
That differs from Strategy Executive Chairman Michael Saylor’s public messaging. Earlier today, Saylor described Bitcoin as entering a “new era of digital capital,” pointing to growing institutional demand and wider adoption by banks, companies and governments as evidence of the asset’s maturing role in global finance.
Where Saylor’s comments focus on Bitcoin’s role as an asset class, Schiff’s criticism centers on whether Strategy’s preferred-stock financing model remains viable if STRC continues trading below its reference price.
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