Peter Schiff, Chief Economist and Global Strategist of Euro Pacific Asset Management, called Strategy Inc.‘s (NASDAQ: MSTR) latest purchase of 1,550 Bitcoin (BTC) for $101 million “damage control” in an X post on Monday, June 8.
The longtime Bitcoin critic argued the move was a quick reaction to possibly calm investors’ nerves. Furthermore, the purchase followed Strategy’s sale of 32 BTC for $2.5 million between May 26 and May 31, its first Bitcoin sale since 2022.
Strategy’s latest BTC purchase was announced alongside a $100 million boost to the company’s cash reserves, bringing them to $1 billion. As such, Schiff argued both moves were funded by issuing new MSTR shares, thereby reducing the amount of Bitcoin each existing share represents.
“If MSTR sold stock at a discount, that diluted Bitcoin per share. This doesn’t prove MSTR can sell Bitcoin, but it does prove it can’t… That’s the beginning of the end,” Schiff stated.
Consequently, Schiff concluded that Strategy’s 845,256 BTC position, currently worth over $54 billion, is too large to exit without triggering a market collapse. In his view, the company has no choice but to keep issuing stock to buy more Bitcoin, which weighs on shareholders.
What’s Saylor’s defense for Strategy’s Bitcoin move from Schiff’s claims?
Saylor has long argued that issuing new shares to buy Bitcoin is accretive rather than dilutive, provided MSTR trades at a premium to its BTC net asset value. Essentially, every new share sold buys more Bitcoin than it dilutes.
According to its 8-K filing, the company sold 1,409,600 MSTR shares, raising $181 million in net proceeds. However, Strategy deployed $101.3 million to buy Bitcoin, while the remaining $80 million was used to build its cash reserve to $1 billion.
As a result, Saylor’s framework of selling more shares to buy Bitcoin may not be a trap but a disciplined capital allocation. Ultimately, the debate between Schiff and Saylor boils down to whether MSTR’s premium to its Bitcoin NAV holds.
