Peter Schiff: MSTR's Business Model is a Scam!

Bitcoin treasury company Strategy (NASDAQ: MSTR) has been alleged to have a business model that economist Peter Schiff claims is a fraud. Schiff stated on the X platform, as a global strategist for Euro Pacific Asset Management, that the entire business model of Strategy is a fraud, and invited Michael Saylor to a debate at the Binance Blockchain Week conference scheduled for early December in Dubai.

Schiff said, "No matter what happens to Bitcoin, I believe that $MSTR will eventually go bankrupt."

Strategy has increasingly turned to preferred shares to raise capital in recent months. However, according to Schiff, the ratio of the company's total asset value has significantly narrowed; this makes it difficult to issue more shares for new Bitcoin purchases. This ratio fell below 1 from 2.5 over the past year.

For the past five years, Strategy's business model has been built on accumulating Bitcoin by issuing stock. The goal is to maximize the amount of Bitcoin per share and act as a proxy for those unable to invest in the digital asset. However, as Schiff pointed out, if investors realize this, they will sell off the preferred shares, and $MSTR will not be able to issue more stock; this would put the company in a difficult situation.

Strategy continues to face challenges amid declines in the Bitcoin market. Last month, the price of Bitcoin fell from $126,000 to $89,000. In addition, the company has an annual dividend obligation of approximately $700 million. Saylor stated in the second quarter earnings call in July, "We won't miss a single dividend payment even in the case of 80% depreciation."