Peter Schiff has issued a stark warning regarding the impending risks associated with Strategy’s bitcoin-backed yield program, suggesting it is on the verge of a critical failure. He claims that the company’s increasing issuance of STRC preferred stock poses a threat not only to the value of MSTR shares but also to bitcoin itself.
Schiff, a long-standing critic of bitcoin, argues that Strategy’s variable 11.5% dividend cannot be sustainably funded. He asserts that this financing model necessitates either the sale of bitcoin or the continuous influx of new STRC buyers, which he describes as a structurally unstable framework.
In a series of posts on X, Schiff outlined the fundamental risks associated with the disparity between Strategy’s bitcoin assets and its escalating cash obligations. The company currently holds 815,061 BTC, following a significant $2.54 billion acquisition on April 20, primarily financed through equity issuance. Schiff emphasizes that bitcoin does not generate any cash flow; meanwhile, STRC must pay a monthly dividend of 11.5% annually to its holders.
According to Schiff, this financial arrangement compels Strategy into a precarious situation where it must choose between two unfavorable options: either liquidate bitcoin to cover dividend payments or persist in issuing new STRC shares to an ever-diminishing pool of yield-seeking investors.
Since its inception in July 2025, STRC has funded the acquisition of approximately 50,792 BTC, commencing with a 9% dividend rate. This rate has been raised seven consecutive times, reflecting a reliance on continuous capital infusion rather than sustainable business operations. In 2026 alone, Strategy acquired 64,948 BTC, a pace that significantly outstrips its historical purchasing rate.
Every new STRC issuance exacerbates the recurring cash challenge, increasing the amount Strategy must secure from external sources. Concerns have surfaced among other analysts regarding the potential behavior of the security during times of credit market volatility or rising interest rates.
Schiff warns that a slowdown in STRC demand could precipitate forced bitcoin sales, which would place downward pressure on BTC prices and adversely impact Strategy’s net asset value. He also points out that the nature of perpetual preferred dividends lacks a firm legal requirement to continue payments, meaning the company could suspend these payouts without facing a formal default.
This situation has drawn attention from various commentators, with some describing the potential fallout as a systemic risk to the broader cryptocurrency market. However, Michael Saylor has consistently dismissed these characterizations, arguing for MSTR’s long-term performance and referencing the company’s $42 billion at-the-market program announced in March. Saylor has also publicly invited Schiff to engage in a debate regarding the STRC structure.
