While Schiff questioned the sustainability of the company's financing model, Strategy said the sale forms part of its capital allocation strategy and reiterated its long-term commitment to Bitcoin.
Bitcoin Sale Fuels Schiff Criticism
Peter Schiff once again criticized Strategy after the company sold a portion of its Bitcoin holdings to help fund dividend payments. In a post on X that was published on July 7, Schiff described the company's current financial model as a "mid-cycle Ponzi," arguing that it shifted away from its original approach of raising capital through stock and debt issuance to buy more Bitcoin.
Schiff's comments came shortly after Strategy confirmed it sold 3,588 Bitcoin for approximately $216 million. According to the company, the proceeds will be used to fund dividend obligations associated with its Digital Credit securities. Despite the sale, Strategy is still by far the largest publicly traded corporate holder of Bitcoin, with 843,775 BTC still on its balance sheet.
The sale attracted a lot of attention because Strategy built its reputation around an aggressive long-term Bitcoin accumulation strategy under executive chairman Michael Saylor. While the company historically promoted a buy-and-hold philosophy, the recent transaction raised questions about how it intends to balance shareholder returns with its commitment to expanding its Bitcoin treasury.
Schiff believes the company's preferred stock structure could create more financial pressure if market conditions deteriorate. He argues that declining share prices and rising yields could force Strategy to offer higher dividend payments to maintain investor demand. This could potentially increase the company's reliance on selling Bitcoin or raising additional capital.
These concerns have been amplified by Strategy's recently introduced Digital Credit Capital Framework, which authorizes up to $1.25 billion in Bitcoin sales when necessary. Under this framework, proceeds may be used to strengthen cash reserves, pay preferred dividends, cover debt-related expenses, and fund share buybacks. The company also increased the dividend rate on its STRC preferred stock to 12%.
Saylor defended the company's approach. He explained that Strategy is not abandoning its long-term commitment to Bitcoin but instead adopting a more flexible capital management strategy. According to Saylor, the objective is to avoid becoming a net seller of Bitcoin over time rather than committing to never selling any holdings under any circumstances.
