Recently, Michael Saylor's company Strategy (formerly MicroStrategy) announced the issuance of a new perpetual preferred stock STRF ("Strife") with an annual dividend of up to 10%. The money will be used for company operations and to purchase more Bitcoin.
While some see this as an innovative way to accumulate Bitcoin, some experts warn that this high dividend strategy could put the company in trouble if the price of Bitcoin plummets. Here are the different views of supporters and opponents!
Opponents: High dividend pressure, where will the cash come from?
According to official news, STRF's dividend is as high as 10% per year, with the first cash dividend scheduled for June 30, 2025, and then paid quarterly. The problem is that Strategy's balance sheet relies heavily on Bitcoin rather than traditional sources of income. This means that if the price of Bitcoin falls, it may be difficult for the company to maintain high cash dividends.
Cryptocurrency analyst WhalePanda bluntly criticized: "Saylor may be the catalyst for the next Bitcoin bear market." He pointed out that if Strategy raises $500 million, it will have to pay $50 million in cash dividends each year, and the company simply does not have that much cash reserves.
Another critic, former investment banker Simon Dixon, went so far as to compare the strategy to the collapse of Long-Term Capital Management (LTCM) in the late 1990s, arguing that the high dividend model was extremely risky in the absence of sufficient dollar income.
Supporters: Saylor’s belief in Bitcoin cannot be underestimated
Of course, not everyone is pessimistic. David Bailey, CEO of BTC Inc., supports Saylor, believing that his commitment to Bitcoin and past record of success provide the company with sufficient buffer. Bailey also criticized those doubters for being "ungrateful," emphasizing that Saylor's public publicity and corporate purchases have brought a lot of mainstream attention and capital inflows to Bitcoin.
Bitcoin analyst Dylan LeClair also refuted the comparison of this strategy to LTCM, arguing that Strategy's balance sheet is backed by Bitcoin and does not pose the same systemic risk as a highly leveraged hedge fund.
Preston Pysh, co-founder of the Investor Podcast Network, offered a neutral view: First, he questioned why Strategy didn't take advantage of "a previous preferred stock issuance" (which only paid an annual interest rate of 8% with the option to be paid in common stock or cash), but said that a direct comparison with LTCM was "ridiculous."
At the same time, Pysh also gave a rough estimate, saying that even if the price of Bitcoin plummeted by 70%, Strategy's financial situation could still guarantee more than 10 years of dividend payments.
High-risk strategy or bold innovation?
Saylor’s Bitcoin strategy is undoubtedly bold, but it is also full of risks. On the one hand, high dividends and heavy reliance on Bitcoin make the company vulnerable to market fluctuations. However, some supporters believe that Saylor’s past record and firm belief in Bitcoin provide the company with sufficient buffer.
In general, Saylor's strategy is a double-edged sword, which may bring rich returns but also cause serious crises. Investors should fully understand its risks before participating and make decisions based on their own risk tolerance.
What do you think? Is Saylor's strategy a ticking time bomb or a bold innovation? Share your thoughts in the comments!
